Consumer Agenda for Retirement Security

Initiative #1: Promote a more adequate and secure private retirement income system

C. Expand and improve SEPs.

The Internal Revenue Code permits employers to establish Simplified Employee Pension plans, or SEPs.  These employer-paid plans are fair to employees, and are flexible and easy to administer for employers.  They are particularly popular among small firms and the self-employed.  There are, however, changes that could make SEPs even simpler for employers and more attractive to employees.  These include changes that would bring SEP participation rules into conformity with those of other plans, allow employees to make tax-deferred contributions on a “reverse match” basis, and add protections for surviving spouses.

In addition, the tax rules for SEPs should be revised to encourage SEPSs among household workers.  Currently, households that employ domestic workers do not usually offer retirement plans for their employees, in part because they cannot deduct contributions from their own employment income.  The Internal Revenue Code should be amended to permit employers to deduct contributions for such workers to SEPs.

Learn more about the other initiatives in the Consumer Agenda for Retirement Security.

Initiative 1: Promote a more adequate and secure private retirement income system.
Initiative 2: Empower workers to promote their own retirement security.
Initiative 3: Improve retirement savings plans.
Initiative 4: Improve traditional and hybrid pension plans.
Initiative 5: Make retirement plans fairer for workers and their spouses.

Print the Consumer Agenda for Retirement Security [PDF].