A Simplified Employee Pension (SEP) is a retirement plan designed for self-employed individuals and small business owners. It allows employers to make tax-deductible contributions to their employees' retirement accounts, which are typically held in individual retirement accounts (IRAs). This plan is easy to set up and maintain, making it an attractive option for businesses with few employees. Contributions to a SEP are flexible, meaning employers can decide how much to contribute each year, up to a certain limit. Employees do not contribute to the plan; instead, the employer makes contributions on their behalf. This helps employees save for retirement while providing tax benefits for the employer.