It is also known as a SEP-IRA because separate Individual Retirement Accounts (IRA)are set up for you and each of your eligible employees. 
You, as the employer, then make yearly contributions to each of these IRA accounts. 
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Simplified Employee Pension SEP-IRA

Self-Employed SEP-IRA Pension Plan

A Simplified Employee Pension Plan is a less complex plan for your small business.
The key point is that the IRS rules require that you must make the contributions for all of the employees including yourself. 

If you don't want to make contributions for employees, then a SEP-IRA is not the retirement plan for your business.  However, if the business does not have any employees except yourself, you can still set up a SEP-IRA and contribute only for yourself.
Simplified Employee Pension Plan (SEP-IRA)
SEP-IRA Contribution Limits
If you are a sole proprietor, how much can you contribute to a SEP-IRA for yourself.
For instance, assume that your W-2 compensation is $86,000 and you have chosen the maximum contribution of 25%. Your SEP-IRA contribution would be $21,500 and you would be allowed a $21,500 tax deduction on your corporation federal income tax return.

Now, if you are self-employed, the SEP-IRA calculation becomes a little tricky. We will assume that your sole proprietorship net profit is also $86,000 before any SEP-IRA deduction. 

However, the IRS does not consider the $86,000 to be your net earnings upon which your SEP-IRA contribution is calculated. The IRS requires you to deduct from the $86,000 both the deduction for one-half of the self-employment tax (social security tax) and for your own SEP-IRA deduction.
If your small business is a corporation, it is easy to compute the amount that you can contribute to your own SEP-IRA.  You simply multiply your W-2 compensation by the percentage contribution that you have selected. 
The maximum limit for 2018 is $55,000 and for 2019 is $56,000.
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