The SEP-IRA has several main advantages. Employers get a tax deduction for eligible contributions made to the SEP plan. Employer contributions to the plan are not mandatory. That gives employers flexibility. Eligible employees include all employees who are at least age 21 and have been with a company for 3 years out of the immediately preceding 5 years.
Employers have the option to establish less restrictive participation requirements.
For employees, the SEP-IRA is an excellent employee benefit. The employer's contributions are not deemed income and are not included in an employee's Form W-2. The money contributed to a SEP-IRA belongs to the employee immediately and always. If the employee leaves the company, his retirement contributions go with him, known as portability. The SEP is hassle free and very easy to set up.