What is a Simplified Employee Pension Plan (SEP) suited for?

A Simplified Employee Pension Plan (SEP) is specifically designed for self-employed individuals and small employers to facilitate retirement savings. One of the key features of SEPs is that they allow business owners to make tax-deductible contributions to individual retirement accounts (IRAs) set up for themselves and their employees. This structure is particularly beneficial for small businesses and self-employed individuals due to its simplicity in setup and administration compared to more complex retirement plans.

The plan has fewer administrative requirements, making it an attractive option for those who may not have the resources or need to implement a more intricate retirement plan. This aspect of SEPs enables both small employers and self-employed individuals to contribute a significant amount towards retirement savings while benefiting from tax advantages.

In contrast, other options listed are less applicable. Large corporations typically have access to more complex retirement plans that can accommodate larger employee bases. Employees looking for group insurance would generally be focused on health insurance rather than retirement plans like SEPs. Active military personnel typically have different retirement systems that cater specifically to their service status, such as military pensions or Thrift Savings Plans (TSP). Therefore, the suitability of SEPs distinctly aligns with the needs of self-employed individuals or small employers.