Asked by Justin  |  Submitted April 27, 2015

I owe a large amount of money to my SEP. Is it best to put the money in chunks at a time or wait until I have it all to invest?

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  Answers  |  2

April 28, 2015

Justin - before I can advise you properly, I need to find out what you mean by 'owe a large amount to my SEP'. Are you referring to contributions for this year or did you take a loan against your SEP? Are you referring to catch-up contributions (this only applies if you're able to make traditional IRA contributions to your SEP; otherwise, catch-ups are not allowed)? Are you referring to the best way to invest those funds based on what your SEP is invested in and when interest credits to the account? If you can give me a bit more to go on, I can help you. Thank you.

$commenter.renderDisplayableName() | 01.19.17 @ 00:45

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April 29, 2015

Hello Justin,

A SEP is a form of IRA generally used by self-employed individuals and small businesses for retirement savings. While you may take a withdrawal (called a "distribution") from an IRA or SEP-IRA, you cannot take a loan from it. So as such, you don't actually owe anything to your SEP.

SEP-IRAs are funded only by employer contributions. Some employers will make contributions throughout the year. Others will wait until their tax filing deadline (including any extensions) for the year. Employer contributions to a SEP are tax-deductible.

If you're the employer (or are self-employed), you'll want to decide when to make SEP contributions based on your business' cash flow, any promises to your employees, and when (what tax year) you want the tax deduction.

More information can be found at this IRS page:

http://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-SEPs-Contributions.

Hope that helps.

$commenter.renderDisplayableName() | 01.19.17 @ 00:45

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