SEPs are employer-contributed. The employer selects a fixed percentage of salary for all employees and contribute to an IRA in the employees name. The employe

SEPs are employer-contributed. The employer selects a fixed percentage of salary for all employees and contribute to an IRA in the employees name. The employee cannot contribute additional money into that fund, so the 49k limit is largely hypothetical (except for perhaps the very-successfully self-employed). SEP is certainly better than nothing, but they also don't confer any benefits beyond other tax-deferred etirement plan. And the inability of employees under an SEP to make additional contributions to it is a huge drawback for anyone who can't set the contribution percentage to their preference. (catch-up contributions notwithstanding) IRAs are personal retirement accounts, separate from the issue of employer compensation. Anyone can contribute up to 5k to an IRA in 2009. But if you work for a company with, say, a 401k, you can sock away up to an extra 16.5k. And (the relevant bit) when your employer (inevitably) contributes less than what you'd like, you can personally contribute until you hit that warm fuzzy feeling. I don't know about you, but I've socked away more than 5k per year toward retirement. Rolling with just my own IRA wouldn't cut it. And the lost employer contribution to a tax-deferred plan is a non-trivial amount of additional compensation loss to be considered when moving from corporate employment to small business/self-employment.