ABA Family Legal Guide

The Rights of Older Americans

Pensions

401(k) Plans and Simplified Employee Pension Plans

What is the value of a simplified employee pension plan (SEP) from the employee's perspective?

The employee has access to the funds immediately, though the employee will face a penalty for early withdrawal (before age 59½). Contributions are 100 percent vested immedately, meaning that they belong to the employee as soon as they are made--the employee does not have to work a particular number of years or months.