What Is Sep Retirement Plan? 
A SEP retirement plan a government retirement plan under ERISA , excellent for small business and the self-employed . Participants can contribute up to 25 % of compensation , or $ 51,000 for 2013 and generally tied to annual cost - of - living adjustment for later years . The contributions are tax deductible and accumulate tax deferred . Distributions are taxable at ordinary income tax rates with a 10 % penalty for withdrawals before 59 . 