With a conventional IRA, you contribute pre-tax money that reduces your taxable income. When you withdraw the money in retirement, it is encumbered as ordinary income, meaning your tax obligation was deferred.
With a Roth IRA, you contribute post-tax money. Contributions do not come forward any up-front tax break. Instead, withdrawals are tax-free in retirement.
A SEP is set up by an employer, as well as a self-employed person, and permits the employer to hyperbolize contributions to the accounts of eligible employees. The employer gets a tax deduction for contributions and the employee is not taxed on those contributions, for all that their eventual withdrawals will be taxed at their income tax rate. A self-employed person is both employer and hand so he or she funds their own account.
Rebecca Dawson
Silber Bennett Financial
Los Angeles, CA