Introducing the Guideline SEP IRA

Today, I’m thrilled to announce two milestones that move us forward on our mission to help everyone arrive at a safe, secure retirement, whether they're a small business owner, an employee, or self-employed. First, we’ve officially crossed the threshold of $6 billion in assets under management.

We’re proud to see such accelerated growth that indicates more people are saving for retirement. Secondly, we’re taking our newest retirement product out of beta and introducing it to the world: a Simplified Employee Pension Plan, or SEP IRA.

SEP IRAs are generally meant for self-employed individuals and other small business owners for whom traditional 401(k) plans aren’t always the best fit. 401(k) plans often require active administration, including as related to IRS annual filings, non-discrimination testing, and potential plan audits. SEP IRAs, on the other hand, are simpler than that—if you are self-employed or have one employee and you don't have time to administer a 401(k) plan, a SEP IRA is a simple way to contribute to you and your employees’ retirement savings.

SEP IRAs allow people to add money when it’s convenient—up to 25% of annual compensation, capped at $58,000 for 2021 and $61,000 for 2022.¹ SEP IRAs also help offset income taxes since contributions are tax-deductible. With minimal paperwork and administrative tasks and no annual Department of Labor reporting requirements, Guideline’s SEP IRA uses low-cost mutual funds and rebalances automatically. And just like our core 401(k) product, with the SEP IRA, we offer professionally managed investment portfolios participants can choose from, provide financial education, email support, and charge zero transaction fees.

We’re also proud to launch our SEP IRA out of beta in collaboration with select partners, including Gusto, Square, Ruby Money, and GoSite, with Intuit QuickBooks coming soon, among others. To learn more about Guideline’s SEP IRA—or to compare it with our 401(k) to see which is best for you—check out our product page.

Our growth offers proof of the demand for meaningful benefits. Despite business challenges brought on by the pandemic and increasing turnover, small businesses look to be performing competitively on benefits. As noted in our State of Retirement Planning for Small Businesses report, our new client growth rate for signed plans hit 34% in 2020 and 58% in 2021. What’s very exciting is that almost all of these new clients are businesses offering 401(k) plans to their employees for the very first time.

Pre-pandemic, 89% of Guideline’s clients were first-time offerers in 2019—in 2020 and 2021 that percentage shot up to 93% and 96%, respectively. This indicates that many SMBs are searching for new ways to grow and support their employees in the current economic conditions. For those that are struggling in the chaotic hiring market, many are likely finding that the people they are aiming to hire or retain are looking for benefits that offer stability rather than the “cool” factor of years past.

This is best exemplified by the increase in average monthly contributions from Guideline participants: in 2019 the average monthly contribution was $646, and in 2021 that increased to $783.

The retirement tides are changing. And to be clear, Guideline’s client base isn’t limited to early adopters in the tech industry, but is growing into mainstream adoption across a diverse range of industries including healthcare, construction, manufacturing, and retail.

Guideline is trusted by more than 29,000 clients to manage over $6 billion saved toward their retirement. These small businesses are demonstrating not just that they’re resilient during uncertain times, but in fact have a competitive edge in the war for talent through benefits adoption.

This content is for informational purposes only and is not intended to be construed as tax or investment advice. You should consult a tax or investment professional to determine the best tax advantaged retirement plan for you.

¹ The contributions you make to each employee’s SEP-IRA each year cannot exceed the lesser of: (1) 25% of compensation, or $58,000 for 2021 ($61,000 for 2022). If you are self employed, contributions are generally limited to 20% of your net income. Learn more.