Simplified Employee Pension Law and Legal Definition

Simplified Employee Pension (SEP) is an employee assistance program. According to this program, tax-deductible contributions are made solely by the employer on employees’ retirement savings. Employers will be eligible for tax deductions up to 25% of all participants' compensation. Sole proprietorships, partnerships, limited liability corporations (LLCs), or incorporated businesses, including subchapter S corporations, can establish SEP plans. Participation should be allowed to employees who have completed 21 years of age and has performed any service for the employer in up to 3 of the immediately preceding 5 years.