Can funds be withdrawn from a SEP IRA before age 59 and 1/2?

Whether you are self employed or have employees, benefit from the flexibility to contribute as your cash flow allows, the potential for tax-deferred retirement growth and contribution limits nearly 10 times higher than a Traditional IRA. Below, you'll find answers to frequently asked questions about SEP IRA plans, rules, contribution limits and more.

Expand all

Why should I consider opening a SEP IRA instead of a Traditional IRA?

With a SEP IRA, your business and employees (including you) can benefit. Contributions you make to the individual accounts under your plan are generally tax deductible by your business.Footnote ¹ You also have the opportunity to contribute nearly 10 times more to a SEP IRA than a Traditional IRA.

What are the contribution limits for a SEP IRA?

Employer contributions are limited to the lesser of $57,000 for 2020 ($56,000 for 2019) or 25% of eligible compensation (20% of self-employed net earnings).Footnote ²

Who can contribute to the account?

Contributions are made only by you as the employer.

Can I roll over funds from a retirement account with a previous employer?

Yes. You can consolidate your retirement assets by rolling over 401(k), 403(b) and 457 accounts into a Merrill SEP IRA. You can also roll over a SIMPLE IRA after you have participated in the account for 2 years.

A Rollover IRA isn't right for everyone. Consider all of your choices and learn if a rollover may be right for you. For additional information, call 888.637.3343888.637.3343 to speak with a rollover specialist, 24/7.Footnote ^†

How much does it cost for me and my employees to set up SEP IRA accounts?

There are no setup or administrative fees for your business or your employees, if you have them.

Can funds be withdrawn from a SEP IRA before age 59½?

If the original contribution or earnings are withdrawn before reaching age 59½, there may be an additional 10% early withdrawal penalty.Footnote ³

When are contributions fully vested?

Contributions are 100% vested immediately.

What investment choices are available?

A full range of investment choices is available, including stocks, bonds, options, ETFs and well-known mutual funds. You may also consider a savings IRA from Bank of America, N.A. Learn more about investment choices

What if I prefer to invest with an advisor?

Managed portfolios and one-on-one advice are not available for the Merrill SEP IRA. However, you and your employees will have access to a full range of investments, step-by-step guidance, easy-to-use tools and award-winning research.Footnote ⁴ Get help when you want it by meeting with a Financial Solutions Advisor in person or on the phone. Learn more about online investing & trading

What are the advantages for employees?

Interest, dividends, employer contributions and other investment earnings have the potential to grow tax deferred until they are withdrawn at retirement.

What is the plan establishment deadline?

You can establish a SEP IRA and make contributions by your business tax filing deadline, including extensions, to take advantage of the potential tax opportunities for the preceding calendar year.

Is IRS Reporting required?

No. IRS reporting is not required.

Learn more about SEP IRAs

Compare small business retirement plans

Plans for self-employed business owners

Plans for businesses with employees

Let us help you find your best options

Need help or have questions?

Call 855.667.9451855.667.9451

Mon-Fri 9 a.m. - 8 p.m. ET to speak with a Financial Solutions Advisor

Find a local
Financial Solutions
Advisor

Footnote ^† You have choices about what to do with your employer-sponsored retirement plan accounts. Depending on your financial circumstances, needs and goals, you may choose to roll over to an IRA or convert to a Roth IRA, roll over an employer-sponsored plan from your old job to your new employer, take a distribution, or leave the account where it is. Each choice may offer different investment options and services, fees and expenses, withdrawal options, required minimum distributions, tax treatment, and different types of protection from creditors and legal judgments. These are complex choices and should be considered with care. Visit www.merrilledge.com/retirement/rollover-ira or call a Merrill rollover specialist at 888.637.3343888.637.3343 for more information about your choices.

Important disclosures

Footnote ¹ As the business owner, your contributions to your SEP IRA account and deductions for such contributions may vary based on your net earnings and self-employment tax deduction. Please consult your tax advisor.

Footnote ² Contribution and compensation limits are subject to a cost-of-living adjustment annually pursuant to the Internal Revenue Code. Contribution and compensation limits for subsequent years may vary.

Footnote ³ Withdrawals are subject to ordinary income tax. In addition, a 10% additional early withdrawal penalty may apply to withdrawals taken prior to age 59½.

Footnote

Institutional Investor magazine announced BofA Global Research as the Top Global Research Firm in 2019 based on surveys held throughout the year. The magazine creates rankings of the top research analysts in a wide variety of specializations, drawn from the choices of portfolio managers and other investment professionals at more than 1,000 firms. BofA Global Research is research produced by BofA Securities, Inc ("BofAS") and/or one or more of its affiliates. BofAS is a registered broker-dealer, Member SIPC popup, and wholly owned subsidiary of Bank of America Corporation. For more information about this award, go to Institutional Investor popup. Rankings and recognition from Institutional Investor are no guarantee of future investment success and do not ensure that a current or prospective client will experience a higher level of performance results and such rankings should not be construed as an endorsement.

3083405

Connect with us:

Investing in securities involves risks, and there is always the potential of losing money when you invest in securities.

Asset allocation, diversification and rebalancing do not ensure a profit or protect against loss in declining markets.

Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.

This material is not intended as a recommendation, offer or solicitation for the purchase or sale of any security or investment strategy. Merrill offers a broad range of brokerage, investment advisory (including financial planning) and other services. Additional information is available in our Client Relationship Summary (PDF).

Merrill Lynch, Pierce, Fenner & Smith Incorporated (also referred to as "MLPF&S" or "Merrill") makes available certain investment products sponsored, managed, distributed or provided by companies that are affiliates of Bank of America Corporation ("BofA Corp."). MLPF&S is a registered broker-dealer, a registered investment adviser, Member Securities Investor Protection (SIPC) popup and a wholly owned subsidiary of Bank of America Corporation ("BofA Corp").

Merrill Lynch Life Agency Inc. (MLLA) is a licensed insurance agency and wholly owned subsidiary of BofA Corp.

Banking products are provided by Bank of America, N.A. and affiliated banks, Members FDIC and wholly owned subsidiaries of Bank of America Corporation.

Investment products offered through MLPF&S and insurance and annuity products offered through MLLA:

Are Not FDIC Insured	Are Not Bank Guaranteed	May Lose Value
Are Not Deposits	Are Not Insured by Any Federal Government Agency	Are Not a Condition to Any Banking Service or Activity

I'd Like to

Discover Merrill

Contact Us

888.637.3343

Representatives are available 24/7

Connect with us:

Unlimited $0 Trades

With Merrill Edge Self‑Directed, get unlimited free online stock, ETF and option trades with no trade or balance minimumsFootnote double asterisk **

Options contracts and other fees may applyFootnote asterisk *

Open an account

Learn about SEC Share Class Selection Disclosure Initiative

Footnote asterisk

Other fees may apply. Free and $0 means there is no commission charged for these trades. $0 option trades are subject to a $0.65 per-contract fee. Sales are subject to a transaction fee of between $0.01 and $0.03 per $1,000 of principal. There are costs associated with owning ETFs. To learn more about Merrill pricing, visit our Pricing page.

Footnote double asterisk

Merrill waives its commissions for all online stock, ETF and option trades placed in a Merrill Edge^® Self-Directed brokerage account. Brokerage fees associated with, but not limited to, margin transactions, special stock registration/gifting, account transfer and processing and termination apply. $0 option trades are subject to a $0.65 per-contract fee. Other fees and restrictions may apply. Pricing is subject to change without advance notice.

Investing in securities involves risks, and there is always the potential of losing money when you invest in securities.

Asset allocation, diversification and rebalancing do not ensure a profit or protect against loss in declining markets.

The performance data contained herein represents past performance which does not guarantee future results. Investment return and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted. For performance information current to the most recent month end, please contact us.

Net Asset Value (NAV) returns are based on the prior-day closing NAV value at 4 p.m. ET. NAV returns assume the reinvestment of all dividend and capital gain distributions at NAV when paid.

Market price returns are based on the prior-day closing market price, which is the average of the midpoint bid-ask prices at 4 p.m. ET. Market price returns do not represent the returns an investor would receive if shares were traded at other times.

Returns include fees and applicable loads. Since Inception returns are provided for funds with less than 10 years of history and are as of the fund's inception date. 10 year returns are provided for funds with greater than 10 years of history.

Before investing consider carefully the investment objectives, risks, and charges and expenses of the fund, including management fees, other expenses and special risks. This and other information may be found in each fund's prospectus or summary prospectus, if available. Always read the prospectus or summary prospectus carefully before you invest or send money. Prospectuses can be obtained by contacting us.

Expense Ratio – Gross Expense Ratio is the total annual operating expense (before waivers or reimbursements) from the fund's most recent prospectus. You should also review the fund's detailed annual fund operating expenses which are provided in the fund's prospectus.

Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.

Banking products are provided by Bank of America, N.A. and affiliated banks, Members FDIC and wholly owned subsidiaries of Bank of America Corporation ("BofA Corp.").

Merrill Lynch Life Agency Inc. (MLLA) is a licensed insurance agency and wholly owned subsidiary of BofA Corp.

Investment products offered through MLPF&S and insurance and annuity products offered through Merrill Lynch Life Agency Inc.:

Are Not FDIC Insured	Are Not Bank Guaranteed	May Lose Value
Are Not Deposits	Are Not Insured by Any Federal Government Agency	Are Not a Condition to Any Banking Service or Activity

Merrill A Bank of America Company Merrill A Bank of America Company

3019973

AC260ED1 (JCF*******801)