Are you thinking about opening a SEP IRA account for your small business? SEP IRAs are one of the best ways for self-employed entrepreneurs, digital nomads, and small business owners to save money for retirement in a tax-shielded account.
The SEP IRA limits for 2021 are $58,000 in maximum contributions or 25% of your total compensation (whichever number is less). Since this money is set aside for retirement, it's crucial to choose the right SEP IRA provider from the start to avoid unnecessary problems in the future and reduce your fees. Careless fees are one of the biggest wealth destroyers out there.
Our Criteria for selecting the best SEP IRA providers
- Costs & Fees – Many brokerages offer similar, if not exactly the same, services so watching fees closely is one of the smartest strategies to maximize your returns. For example, many brokerages offer funds which track the infamous Vanguard Total Stock Market Index so why pay higher minimums and fees for the exact same fund?
- Customer Service – Things go wrong. Sooner or later, you will need to speak to a representative on the phone so make sure your SEP IRA provider offers customer service. This is where cheap brokerages fail because they don't provide real life customer service when something terrible happens.
- Investment Options – You want a wide variety of investment options: stocks, bond, mutual funds, index funds, ETFs, REITS, and even things like margin trading & options trading if you want to take even more risk. Not every broker offers these types of securities so double check before you create an account.
I've used several SEP IRA providers over the years and what I look for is simply low index fund fees and cheap stock trading commissions. I currently use Fidelity for my SEP IRA and highly recommend them as much cheaper alternative to Vanguard.
Top SEP IRA Providers
In this review, we'll compare the 5 best SEP IRA brokers so you can decide which SEP IRA is best for your retirement. This will help you compare all the brokers at once and make an educated decision.
Fidelity – Our Top Ranked SEP IRA Provider
Here's a quick overview of Fidelity's offerings:
- Account Minimums: $0
- Stock Trades: $0
- Mutual Funds: Yes
- Index Funds: Yes (Including Zero fee funds)
- Options Trading: $0 per trade + 65 cents per contract
- Other Perks: Fidelity Rewards Visa Signature Card with 2% cashback
Fidelity wins the top award in our rankings due to their excellent customer service, commission free stock trades, and Fidelity Zero fee index fund offerings. They provide phone 24/7 support plus are the only SEP IRA provider in the USA offerings zero fee index funds for investors.
Not only are their fees some of the lowest in the industry, but you have access to over 10,000 mutual funds & index funds through their vast mutual fund network.
I use Fidelity for my SEP IRA & individual brokerage account and cannot recommend them enough.
Vanguard – Trustworthy SEP IRA Broker with Long History
Our 2nd recommendation is Vanguard who up until recently was considered the best SEP IRA provider until Fidelity released Zero Cost Index funds and lowered their IRA minimums.
While Vanguard is an excellent broker, they still have high account minimum on their top index funds and charge $7 per stock trade compared to other brokers who adopted the $5 or less trading model. You need at least $3,000 to invest in any of Vanguard's admiral funds so brand new investors will have to wait a while to start placing money in the best low cost Vanguard index funds.
Etrade – Best Choice for Active Investors (Day Trading & Swing Traders)
Here's a quick breakdown of Etrade's fees and offerings:
- Stocks: $0
- ETFs: $0
- Bonds: $1 for market trades
- Futures Contracts: $1.50
Etrade is one of the best choices for active day traders who constantly buy and sell stocks throughout the day. Etrade's trading platform is excellent and their commission structure favors the active trader.
If you are interested in day trading or swing trading strategies, then Etrade is a good option for your SEP IRA.
That's it! Hopefully, you are one step closer to opening your SEP IRA account and investing for your inevitable retirement from work.
If you have any comments or questions, please leave them in the comments section below. I will do my best to answer them and assist your with your IRA investment goals.
Disclosure: I am not a financial advisor nor was I paid to write this article. I am simply providing my own personal advice for investors based on experience and the best offerings on the marketplace. Please consult a certificated financial advisor before buying or selling any securities.