A SEP-IRA allows small business owners to save up to $56,000 through tax-free profit-sharing contributions but require employers to fund all employee contributions. Choosing the right provider can save you time, money and prevent administration headaches. We’ve identified the best SEP-IRA providers and compare the best six below, including their costs and investment options.
Top 6 SEP-IRA Providers
|Vanguard||Best overall for business owners who want a simple, cost-effective SEP IRA from a leading mutual fund company|
|Franklin Templeton Investments||For business owners who want access to industry-specific mutual funds in an easy to set up SEP IRA account|
|Entrust||For business owners who want a self-directed account to invest in alternative assets like real estate|
|E-Trade||For people who want to actively trade stock and other securities in their retirement account|
|Fidelity||For business owners who are looking for a large network of offices for in-person guidance|
|TD Ameritrade||For those looking for a traditional provider as an alternative to Franklin Templeton or Vanguard|
How We Determined Which SEP-IRA Provider is Best
SEP-IRAs are very different from 401(k)s and other IRAs. This is because employers are required to fund employee contributions proportional to their own contributions based on annual compensation. As a result, SEPs are preferable for business owners with very few or no employees. To compare SEP-IRA providers, we considered brokerage firms, mutual fund companies and alternative providers of self-directed accounts. The criteria we used to judge the best SEP-IRA providers include:
- Ease of setup – We looked at the process for setting up a new account, such as how long setup takes, whether it can be done online and if contributions are done electronically
- Investment options – Each provider offers investors with a different degree of investment flexibility. We considered whether you can invest in stocks bonds, ETFs, alternative assets or just mutual funds
- Costs – How expensive it is to set up and maintain an account, expected trading costs and fund expense ratios
- Customer service – This comes down to examples like whether you’re assigned a dedicated representative, if there are offices to visit to get help or if you have to rely on a toll-free phone number
- Additional services – Other services besides SEP-IRAs that may be helpful for small business owners
Based on these considerations, we suggest first checking with a current provider if you already have a relationship with a mutual fund company or brokerage firm. If you don’t, we recommend Vanguard as the best SEP-IRA provider. Vanguard is an extremely reputable company that offers SEP-IRAs with a host of mutual fund investment options at a reasonable cost.
Best Overall SEP-IRA Provider: Vanguard
Vanguard is the best overall SEP-IRA provider because it is an extremely reputable provider of no-frills, low-cost investments. Vanguard is the world’s largest mutual fund company and offers several retirement plan solutions including SEPs. Vanguard doesn’t offer additional services but provides tremendous cost savings and is ideal if you want to focus on passive mutual fund investing.
What Vanguard Offers
Vanguard is the largest mutual fund company in the world and has more than $4.5 trillion in assets under management. It has more than 100 professionally managed mutual funds and ETFs that are ideal for any investor. Vanguard is a storied firm with a solid reputation. It offers investments at incredibly low costs.
Vanguard has a line of mutual funds that are among the lowest-cost options in the investment industry. In a SEP-IRA with Vanguard, investments options include the following Vanguard funds:
- Money market funds – Funds that provide little return but offer high liquidity by investing only in short-term debt
- Bond funds – Funds that invest in debt issued by companies, municipalities or countries to provide interest income
- ETFs – In addition to mutual funds, Vanguard provides a line of ETFs that are indexed and function like a basket of stocks
- Equity funds – Funds that aim for price appreciation and dividends by investing in stocks
- Target date funds – Vanguard has some of the best target date funds in the industry, which automatically shift from stocks to safer investments like bonds as a target retirement year draws closer
Vanguard’s SEP-IRA offering is very straightforward and gives investors access to more than 100 mutual funds. It is the ideal provider for self-employed individuals who want to save on costs and not trade in their account. Vanguard doesn’t provide additional services like loan facilities, checkbook control or banking services.
Administration & Customer Service
Vanguard offers direct customer service online and over the phone. You won’t get an assigned a representative but SEP-IRAs require almost no administration and Vanguard has a team of professionals standing by to help. Vanguard funds are also available through most financial advisors, who can provide more individual guidance as necessary.
Vanguard SEP-IRA Costs
Vanguard is extremely straightforward with its SEP-IRA costs. There are no account maintenance fees or trading costs, which is a big plus. SEP-IRA account holders pay just $20 per year for each fund that’s used in the plan. This fee is waived for investors who have more than $10,000 in their account. Vanguard SEP-IRA costs include:
- Average fund expense ratio (0.12 percent per fund) – These fees are charged automatically by funds to cover the costs of trading and fund management
- Annual fund fees – $20 per year for each fund you use within your SEP-IRA if your account balance is less than $10,000
What’s Missing With Vanguard
Like Franklin Templeton, individual investment advice isn’t available directly from Vanguard. Vanguard doesn’t have offices around the country so, if you want individual guidance, you’ll need to hire a financial advisor at additional cost. Vanguard only offers mutual funds, target date funds and ETFs — you can’t trade stocks or bonds. Also, there aren’t additional banking services.
Best for Industry-specific Mutual Funds: Franklin Templeton Investments
Franklin Templeton Investment is the world’s fourth largest mutual fund company and, like Vanguard, offers more than 100 mutual funds. Unlike Vanguard, it offers niche mutual funds that focus on a specific industry or sector, rather than the broader market. Franklin Templeton is among the best SEP-IRA companies offering industry-focused investments for small business owners but doesn’t have other additional services or investment options.
What Franklin Templeton Offers
With more than $300 billion in assets under management, Franklin Templeton is the fourth largest mutual fund company in the world. Its family of funds includes more than 100 professionally-managed mutual funds, each available in multiple share classes to suit any investor. Franklin Templeton has an excellent reputation as a well-established firm and offers a wide array of funds at a very reasonable cost.
Franklin Templeton offers proprietary funds to all its customers at a low cost. While Franklin’s costs are not the lowest in the mutual fund industry, they are very reasonable given the company’s wide array of investments options. These investment options include some of the best sector-focused mutual funds in the industry. Specific Franklin Templeton SEP-IRA investment options include:
- Money market mutual funds – Money market funds invest in CDs and short-term debt to give investors with a high degree of liquidity and sometimes a small interest rate.
- Bond funds – Debt-focused funds hold a portfolio of bonds designed to provide investors with interest income
- Equity funds – Equity funds aim for price appreciation by concentrating investments in small-, mid- or large-cap stocks
- International funds – Unlike domestic funds, international funds focus investments in foreign assets to benefit from currency fluctuations
- Target date funds – Franklin Templeton offers a few target date funds, which automatically rebalance between stocks and bonds as you get closer to a target retirement age
- Sector-focused funds – Unlike almost any other major mutual fund company, Franklin Templeton offers a variety of funds that invest in specific sectors like gold, oil and gas or healthcare
Franklin Templeton has a very cost-effective, easy-to-use SEP-IRA offering that gives investors access to more than 100 funds. It’s the best provider for self-employed individuals who want to save on trading costs and focus on passive investing. Franklin doesn’t offer additional services like stock trading, lending, self-directed accounts or even typical banking services.
Administration & Customer Service
Franklin Templeton places a strong value on good customer service. Investors don’t get a dedicated representative, but there’s very little administration required in a SEP to cause problems. In addition to selling shares directly to investors, Franklin Templeton funds are available through independent financial advisors around the country, who you can use for one-on-one guidance if necessary.
Franklin Templeton SEP-IRA Costs
Although not the least expensive of our best SEP-IRA companies, Franklin is reasonably priced for the financial industry. For a SEP, business owners are charged annual account fees of $10 to $15 and fund expense ratios of 0.5 to 1 percent of the amount invested. If you buy loaded shares, you’ll also pay commissions of up to 5.75 percent on initial purchases. Franklin Templeton’s SEP-IRA costs are very straightforward and include:
- Mutual fund expense ratio (0.5 to 1 percent per fund) – Each of Franklin Templeton’s funds charges an expense ratio that covers the costs of management, trading, bookkeeping and so on
- Annual IRA account maintenance fees ($10 to $15) – Every IRA account at Franklin is charged an annual fee. If you have less than $50,000 in your account, the fee is $15. However, once you have more than $50,000, your only pay $10
- Commissions (0 to 5.75 percent) – Certain share classes of Franklin’s mutual funds charge commissions on new share purchases (not on trading); these commissions vary depending on what share class you buy and how much you invest; there are also advisor class shares available for most funds that do not charge commissions
What’s Missing With Franklin Templeton
Franklin Templeton fund expense ratios are higher than some other providers, and the commissions can be very expensive if you buy loaded shares. Another downside to providers like Franklin Templeton is a lack of individual investment advice. Franklin Templeton funds are sold by many financial advisors but there aren’t Franklin Templeton offices where you can get specific financial advice. For more help, you may need to hire an advisor.
Best Self-directed SEP-IRA Provider: Entrust Group
Entrust is an alternative provider that gives investors total control of their SEP-IRA to invest in a far wider array of investments. Although Entrust is a smaller company and more expensive than others on our list, it’s a great alternative for those who want to use their IRA to invest in real estate or other alternative assets.
What Entrust Offers
Because of the added expense of using an alternative provider like Entrust, it doesn’t offer the traditional investments that you’d find at more mainstream providers. Instead, Entrust is one of the best SEP-IRA companies for giving clients the ability to invest in alternative assets like real estate or precious metals.
Investments available through Entrust include:
- Real estate – Investors can use SEP-IRA assets to purchase homes, buildings, developed land and even mobile homes and foreclosures
- Precious metals – Clients can purchase gold and silver through Entrust
- Mortgage notes – Other providers give investors the ability to buy and sell bonds but Entrust allows clients to invest in private loans
- Checkbook control – For self-directed SEP-IRA accounts with Entrust, you can get the most investment flexibility by using checkbook control, which allows you to invest in almost anything simply by writing a check
- Private placements – Unlike trading stock in companies listed on national exchanges, Entrust lets you invest in small, privately held companies through your SEP
For more information on using a SEP-IRA to invest in alternative assets like real estate, read our article on Self-directed IRA for Real Estate Investing.
Entrust is a superb alternative provider but should only be used if you want to own alternative assets in your SEP-IRA. Through Entrust, you can have a complete self-directed account or checkbook control. Entrust doesn’t offer loans because it’s illegal to borrow against IRA assets. However, Entrust can help arrange nonrecourse loans to finance the purchase of real estate in your SEP-IRA. Specific Entrust services include the following:
- Self-directed SEP-IRA – Invest in small, privately owned companies or alternative assets
- Checkbook control – Using Entrust, you can set up a checking account at any bank and invest in any private deal just by writing a check
- Financing real estate purchase – You aren’t allowed to borrow against a SEP-IRA, but Entrust can help you get a nonrecourse loan to buy real estate in your SEP-IRA
Administration & Customer Service
Entrust is a smaller alternative SEP-IRA provider. Its services are mostly online, and it focuses exclusively on providing self-direct accounts to clients who want to invest in alternative assets like real estate. However, the provider is very good at what it does.
If you want to use Entrust to make alternative investments, you won’t get the same customer service as you’d find at a large national brand. You also won’t find the same cost savings. However, if you want access to specialized investments or checkbook control, Entrust is an ideal option.
A SEP-IRA through Entrust is more expensive than an account with most large, national providers of more traditional investments. You’ll not only pay a setup fee for a self-directed account with Entrust but also potentially large annual administration fees, depending on the size of your account and your investments. The typical fees you should expect to find for an Entrust SEP-IRA include:
- Setup fee – $50 on-time to establish an account (waived if you’re investing in precious metals)
- Annual account administration fee – $150 for precious metals; otherwise, $299 per asset or between 0.6 to 1 percent of account value, depending on how much you have invested (minimum of $199 and maximum of $1,995)
What’s Missing With Entrust
The biggest drawback to alternative providers like Entrust is that they are very expensive compared to more traditional providers. Entrust doesn’t even offer traditional investment like stocks, bonds or mutual funds because they can be traded so much more inexpensively through other providers. Entrust focuses exclusively on helping clients buy alternative investments but, in this area, it is better than most other options.
Best SEP-IRA Provider for Active Trading: E-Trade
E-Trade started as a discount brokerage firm and, although it has expanded its offerings to include different types of accounts like SEP-IRAs, online trading is still its primary service. A SEP-IRA through E-Trade is most appealing to small business owners who want access to many types of securities, such as individual stocks, and the ability to trade actively.
What E-Trade Offers
E-Trade offers SEP-IRAs that give account holders access to online trading in any number of listed securities. E-Trade even gives you full trading capabilities from your phone or mobile device. It has a robust trading platform that is built around its clients’ needs. E-Trade is good for investors who want to actively trade many types of securities in their SEP.
Typical E-Trade SEP-IRA investment options include:
- Stocks – Investors can trade in shares in most listed companies through E-Trade
- Bonds – Although known primarily for trading stocks, E-Trade gives investors access to more than 30,000 types of fixed income products
- Mutual funds – E-Trade isn’t the best option for mutual funds, but investors on its platform have access to several thousands of third-party funds
- ETFs – E-Trade is a good platform for trading ETFs, which are portfolios of individual securities that trade like stocks
- Options – Through E-Trade’s platform, you can trade in options contracts on different underlying securities
In addition to SEP-IRAs and a great trading platform, E-Trade’s additional services include:
- Banking services – E-Trade has a banking arm that offers checking and savings accounts online, with free use of ATMs nationwide
- Mobile access – As an online provider, E-Trade provides clients with full access to its banking and brokerage services online and provides greater flexibility for banking and trading through mobile devices than most other providers
E-Trade was founded as an online discount brokerage firm focused on giving people the ability to trade quickly and inexpensively. However, E-Trade has built out its services around retirement benefits and other client needs. The firm now offers several types of IRAs including SEPs, which grant account holders the same degree of trading flexibility and many of the same services.
Administration & Customer Service
E-Trade is purely an online provider so customer service can be a problem, especially if you need individual investment advice. If you work with E-Trade, you won’t be assigned an individual representative to oversee your account, and you’re never going to get individual guidance through an office. However, if you’re comfortable using technology and want a good platform for actively trading your SEP-IRA, then E-Trade is an ideal option.
E-Trade SEP-IRA Costs
Like other brokers, charges for an E-Trade SEP account come from trading. E-Trade charges commissions starting at $6.95 for United States stocks and ETFs, $1 per bond and $6.95 for options plus $0.50 to $0.75 per contract. E-Trade offers free access to more than 4,400 mutual funds, although you’ll still pay expense ratios. Typical costs for an E-Trade SEP-IRA include:
- Stocks – $6.95 per trade
- Bonds – $1 per trade
- Mutual funds – Prices vary; free for more than 4,400 funds; mutual funds also charge expense ratios that start at 0.15 percent and range up to more than 2 percent for specialty funds
- ETFs – $6.95 per trade
- Options – $0.50 to 0.75 per contract plus $6.95 per trade
Historically, E-Trade has operated as a discount online brokerage firm and that remains the company’s core service today. E-Trade remains very competitive on cost compared to other financial firms. However, trading still isn’t free and costs can quickly add up if you trade too frequently. Day trading isn’t recommended in retirement accounts like SEPs but is available with E-Trade for those who want the ability.
What’s Missing With E-Trade
Unlike some providers, E-Trade doesn’t offer very many additional services, although the free use of ATMs for banking is nice. Also, as an online platform, customer service can be a challenge. Because E-Trade is a brokerage firm and not a mutual fund company, it’s best if you intend to trade stocks and bonds. If you want to stick to passive mutual fund investing or target date funds, you’re better served using Vanguard or Franklin Templeton.
Best In-person SEP-IRA Provider: Fidelity
Fidelity is a diversified financial services company that offers a host of services for small businesses that can be customized to suit particular needs. Fidelity is one of the best SEP-IRA providers for investors who want access to a large network of offices where they can get in-person guidance and individual customer service.
What Fidelity Offers
Like Vanguard, Fidelity offers a basic SEP-IRA that’s relatively low cost. The big advantage that Fidelity offers compared to other providers is access to individual guidance through a nationwide network of investor centers.
Investment options through a Fidelity SEP-IRA include:
- Stocks – Traded stocks on national exchanges to try for higher returns
- Bonds – Buy or trade bonds for interest income in your SEP-IRA
- Mutual funds – Invest in professionally managed baskets of stocks or bonds. Fidelity has its own index funds as well as access to third-party funds
- Target date funds – Fidelity has target date funds that switch from stocks to bonds as you approach retirement
- ETFs – Portfolios of individual stocks or bonds that can be traded like stocks; Fidelity has its own ETFs as well as access to third-party ETFs
- FDIC-insured CDs – Fidelity offers certificates of deposit just like you would find at a bank
These investment options can be used individually or in combination based on your investment goals or strategy. If you need help deciding on an investment strategy, one of Fidelity’s representatives can assess your needs and help formulate a strategy that works for you.
In addition to SEP-IRAs, Fidelity offers additional services that include:
- Investment advice – If you need help picking investments, you can get individual guidance through a Fidelity Investor Centers
- Cash management – Fidelity can help manage your company funds with sweep accounts, CDs and other tools
- Brokerage services – Fidelity’s trading platform lets you trade stocks, bonds, ETFs and other securities
- Education savings plans – You can set up a savings account for a child’s education
- Annuities – Fidelity can help you purchase an annuity contract outside your SEP
- Life insurance – Fidelity offers term life, universal life and long-term care insurance options
Administration & Customer Service
Fidelity has great customer service compared to most national providers. Although it doesn’t have an investor center in every community, it has one of the largest networks of offices where you can work with an individual representative. Although SEP-IRAs are easy to administer with Fidelity, it also has a call-in center to help with any issues.
Fidelity SEP-IRA Costs
Most costs of a Fidelity SEP-IRA are based on your investments and trades. Fidelity doesn’t have account setup or maintenance fees but charges commissions starting at $4.95 for equity trades, plus additional costs for bonds or international trades. You’ll also pay expense ratios for mutual funds and ETFs and other fees for additional services. Fidelity SEP-IRA costs include:
- Commission fees – $4.95 per trade for U.S. equities and $1 per bond for U.S. bond trades
- International fees – Commissions for trading stocks in 25 foreign markets that vary by country
- Additional fees for wire transfers and other services – Fidelity charges $10 for cashier’s checks, $15 for returned checks, $10 for bank wires initiated online and up to 3 percent for foreign wires
- ETF and mutual fund expense ratios – Mutual funds and ETFs offered through Fidelity have expense ratios starting as low as 0.035 percent for Fidelity Index Funds
Although some transactions and services have additional fees, Fidelity doesn’t have hidden fees. All expenses are disclosed before you trade or approve a service.
What’s Missing With Fidelity
Fidelity is good for customer service and relatively simple retirement plans. However, if you plan to trade frequently in your accounts or take advantage of additional services, its costs can add up quickly.
Another Traditional SEP-IRA Option: TD Ameritrade
If you already have an account with TD Ameritrade and want to establish a SEP-IRA with a reputable provider, TD Ameritrade is a good traditional alternative to Franklin Templeton or Vanguard. TD Ameritrade has a wide selection of investment options but is more expensive than other providers. Nevertheless, SEP IRAs through TD Ameritrade still aren’t too expensive and are easy to set up and administer.
What TD Ameritrade Offers
Like E-Trade, TD Ameritrade also offers access to online and mobile trading with a number of trading tools available to clients. Investors can also access independent research for help making specific investment decisions. However, individual advice from an actual person can be hard to find.
TD Ameritrade SEP-IRA investment options include:
- Stocks – You can trade in listed stocks through TD Ameritrade’s platform
- Bonds – Investors can buy or trade individual bonds issued by companies and countries
- Mutual funds – Get access to more than 13,000 mutual funds
- Target date funds – TD Ameritrade offers target date funds that adjust to safer investments as you reach retirement age
- ETFs – Clients can trade in baskets of stocks through TD Ameritrade’s platform
- CDs – TD Ameritrade also offers certificates of deposit like you’d find at a bank
- Options – Investors can trade in options on various securities through TD Ameritrade
- Futures – Similar to options, TD Ameritrade also gives investors the ability to trade in futures contracts
- Currencies – TD Ameritrade’s platform gives clients the ability to trade in individual currencies from around the globe
TD Ameritrade offers a huge assortment of investment options to clients but all at a cost. TD Ameritrade’s research can help you choose investments, but you really need to know what you’re doing before you venture into more exotic investments.
TD Ameritrade offers additional services to SEP-IRA clients including:
- In-person advice – TD Ameritrade has some offices around the country where you can get in-person help
- Cash management – You can use TD Ameritrade to manage company accounts and automate retirement plan contributions
- Managed portfolio products – TD Ameritrade offers some proprietary managed portfolio products for clients seeking a particular investment strategy
- Annuities – If annuities are part of your retirement planning, TD Ameritrade can help you purchase an annuity contract outside your SEP
Administration & Customer Service
TD Ameritrade has offices around the country and generally strong customer service. If you prefer to work with an individual rep, you can try to go through one of its offices. However, you can also trade and administer your account online if you prefer not to visit one of its offices.
TD Ameritrade SEP-IRA Costs
Like Fidelity, TD Ameritrade SEP-IRA costs are based on your trading and investments. There aren’t annual fees except for some services like paper statements, but TD Ameritrade charges commissions starting at $6.95 for U.S. stocks and ETFs. Some stocks and ETFs can be traded commission-free but you’ll still pay expense ratios on fund investments. TD Ameritrade does not charge fees for setting up or administering a SEP-IRA but typical costs include:
- Trading commissions – $6.95 for US stock trades online, bonds and CDs trade on a net yield basis (so the commission is built into the price of the bond), $6.95 for ETFs that aren’t on its commission-free list and $50 for no-load mutual funds
- Paper statements – $2 for accounts with balances of less than $10,000
- Wire transfer fees – $25
- Outgoing full account transfer fee – $75
- Mutual fund expense ratios – Like other providers, mutual funds purchased through TD Ameritrade charge expense ratios that start at under 0.4 percent
Like E-Trade, TD Ameritrade has an offering that is focused predominantly on trading commissions rather than annual fees. In addition, each additional service typically comes with a separate fee. If you aren’t careful, these costs can add up quickly.
What’s Missing With TD Ameritrade
While TD Ameritrade offers some additional services, it doesn’t have a full suite of banking services. Also, although the firm has some offices around the country, offices are only in select markets. Lastly, while TD Ameritrade SEP-IRAs have no costs, trading commissions are higher than most other providers.
Alternative Options to a SEP-IRA
If you aren’t sure whether a SEP-IRA is right for you, you may find more benefit in another kind of retirement account like a Solo 401(k) or a SIMPLE IRA. Every option has its own advantages and avoids the administrative costs of some alternatives like a Traditional 401(k) plan.
If you’re self-employed or have no full-time employees, you may be eligible for an individual or Solo 401(k). These plans offer many of the advantages of a 401(k) without the administrative costs or compliance headaches. Like SEP-IRAs, Solo 401(k) contribution limits are $56,000 but aren’t capped at 25 percent of pretax income. Read our article on getting an individual or solo 401(k) to learn more.
Solo 401(k)s are typically better if you make less than $75,000 or are planning to hire employees. That way, when you hire, your Solo 401(k) will convert to a Traditional 401(k), and you won’t be stuck funding employee contributions as you’d be required to do in a SEP-IRA.
SIMPLE IRAs are ideal for employers who have more than three to five employees. This is because SIMPLE IRAs allow employees to contribute through salary deferrals as opposed to a SEP-IRA that requires employers to fund all contributions on employees’ behalf.
Instead of having to fund all employee contributions, employers have mandatory matching of 3 percent. Learn more about how this compares to a SEP-IRA by reading our article on SIMPLE IRAs vs. SEP-IRAs or read our other article on SIMPLE IRAs to learn more about how they work in general.
Traditional IRAs are the simplest and most straightforward type of retirement account. They are extremely easy to set up and administer. However, they also have the lowest contribution limits at just $6,000 per year. Nevertheless, Traditional IRAs are terrific options for small business owners who can’t afford to contribute more than a few thousand dollars per year.
Once you’ve decided that a SEP-IRA is your best option, the first thing you need to do is determine which of the best SEP-IRA providers is right for you. To make this decision you need to consider several factors, including cost, investment options and additional services. The right one should be unique to your specific needs.
After reviewing these factors, our recommended SEP-IRA provider is Vanguard. It is an extremely reputable company and the most cost-effective provider of professionally managed mutual funds. You can find the forms necessary to open an account online and get set up just a few days.