What is a key advantage of a Simplified Employee Pension Plan (SEP) compared to a Keogh plan?

A key advantage of a Simplified Employee Pension Plan (SEP) compared to a Keogh plan is that it is simpler to create and operate. SEPs are designed to be an easy way for employers to contribute to their employees' retirement savings without the complex administrative tasks that often accompany other retirement plans, such as Keogh plans.

Establishing a SEP typically involves less paperwork, and the contribution process is straightforward, allowing employers to make contributions to their employees' individual accounts with minimal regulatory burden. This simplicity makes SEPs particularly appealing to small business owners who may lack the resources to manage more complex retirement plan frameworks.

In contrast, Keogh plans often come with more elaborate rules and regulatory requirements, making them less user-friendly for employers. This difference in complexity and ease of management is a significant factor driving the preference for SEPs among smaller businesses seeking retirement options for their employees.