When retirement finally arrives, many people holding a SEP IRA face the same question: What should I do with my SEP IRA after I retire? Your decision matters because a SEP IRA often represents decades of contributions, tax-deferred growth, and disciplined saving. Once you stop working, the account’s job changes. Instead of accumulation, your focus shifts to predictable income, tax control, and protecting your principal from the kind of market volatility that can permanently weaken a retirement plan.

At Diversified Insurance Brokers, we help retirees turn SEP IRA balances into structured, retirement-friendly strategies built on safety, guarantees, and dependable income. Whether you want a conservative plan that protects principal, a strategy that creates lifetime income, or a blended approach that still allows for growth, the key is understanding each option and how it impacts taxes, withdrawals, and long-term security.

Understanding how a SEP IRA works after you retire

A SEP IRA behaves a lot like a Traditional IRA in retirement, but it often holds a larger balance because contribution limits were higher and deposits were employer-funded. The biggest practical point is this: SEP IRA withdrawals are generally taxed as ordinary income, and once you begin taking money out, your distribution choices will influence both your tax exposure and how long the account lasts.

If you want a clean refresher on the structure and rules, start here: How Does a SEP IRA Work?. It helps clarify why SEP IRAs are popular for self-employed retirement accumulation—and why retirees often reposition them into more retirement-friendly designs once contributions stop.

Once retired, most SEP IRA owners are trying to solve the same set of problems: creating reliable income, reducing the risk of forced withdrawals during market downturns, and avoiding unnecessary taxes caused by poorly timed distributions. SEP IRAs can support all of those goals, but the best approach depends on whether you want maximum flexibility, maximum safety, or a hybrid plan that uses both.

Option 1: Keep the SEP IRA where it is

Some retirees leave their SEP IRA invested and continue using the same custodian and portfolio. This can work if your fees are low, your investment lineup is strong, and you are comfortable with market volatility. It can also make sense if you have other guaranteed income sources—such as Social Security or a pension—and your SEP IRA is not responsible for covering essential expenses.

The main risk is timing. Retirement withdrawals create a unique vulnerability called sequence-of-returns risk. If markets decline early in retirement and you still need withdrawals, you can be forced to sell assets while your account is down. That can reduce the balance permanently, which often leads to lower income later and a higher probability of depleting the account sooner than expected. This is one of the biggest reasons retirees convert part of their SEP IRA into protected strategies.

If you want to keep some SEP IRA assets invested, many retirees still choose to “carve out” a portion for safety—so essential income does not depend on market performance. That blend can preserve long-term growth potential while reducing stress during downturns.

Option 2: Reposition part of your SEP IRA into a fixed or fixed indexed annuity

For retirees who want principal protection, predictable growth, and optional lifetime income, a common approach is rolling part of the SEP IRA into a fixed annuity or fixed indexed annuity. The core idea is simple: create a protected “income and safety” portion so you can cover essential needs and reduce the pressure to sell investments during bad market years.

This approach is popular because it can deliver three retirement outcomes that many investment-only strategies struggle to deliver at the same time: principal protection, contract-defined outcomes, and income you can structure around your household. In other words, instead of hoping the market cooperates, the strategy becomes built around guarantees.

If you want the step-by-step rollover process, see: How to Transfer a SEP IRA to an Annuity. That guide explains how the transfer is typically handled to keep your funds tax-deferred and avoid preventable mistakes.

Retirees tend to like annuity strategies for SEP IRAs when they want to reduce market risk, create predictable growth, or establish a lifetime income “floor.” In many households, the goal is not to annuitize everything. The goal is to build stability—so essential living expenses are covered by predictable income sources while other assets can remain invested for long-term upside.

Option 3: Convert some SEP IRA money to a Roth IRA

Some retirees consider partial Roth conversions as a long-term tax strategy. The general concept is converting a portion of tax-deferred money into a Roth IRA so future growth can potentially be tax-free. This can also reduce future tax-deferred balances, which may lower the size of later required distributions.

The tradeoff is that conversions are taxable in the year of conversion. For many retirees, the “right” conversion strategy depends on the timing of Social Security, pension income, and other taxable sources. Done strategically, partial conversions can smooth taxable income over time. Done poorly, they can push you into a higher bracket or create avoidable tax friction.

Option 4: Start withdrawals, but design a plan instead of guessing

Many retirees start taking SEP IRA withdrawals soon after retirement because they need the income. The mistake is treating withdrawals like a simple monthly transfer without coordinating taxes and market risk. A stronger approach is designing withdrawals as part of an overall retirement income system.

In practice, retirees are usually trying to answer questions like: how much income do we need every month for essentials, which accounts should fund that income first, and how do we avoid selling investments in a down market? For many households, a protected income stream can reduce pressure on the SEP IRA’s investment portion, which can help the plan remain sustainable longer.

For additional background on how retirement accounts behave once withdrawals begin, this can be helpful: How Does an IRA Work?. SEP IRAs share many retirement-phase characteristics with Traditional IRAs, so the distribution lens is often similar even though the accumulation phase was different.

Using your SEP IRA to create lifelong guaranteed income

A SEP IRA can be a powerful retirement engine, but the retiree challenge is converting a balance into dependable income. Many retirees use annuities because they can turn a portion of retirement savings into predictable income that does not depend on market performance. That helps cover essential expenses and reduces the need to draw aggressively from investments during uncertain periods.

For some retirees, the goal is immediate income. For others, the goal is protecting a portion of principal now and activating lifetime income later—often to coordinate with a future Social Security start date or a spouse’s retirement timeline. Either way, the planning advantage is that income design becomes intentional rather than reactive.

How Diversified Insurance Brokers helps retirees with SEP IRA decisions

SEP IRA strategies work best when they fit your overall retirement income puzzle. At Diversified Insurance Brokers, we help retirees compare protected annuity designs, evaluate income rider structures, and build practical plans that prioritize stability without giving up smart flexibility.

We focus on the real-world retiree questions: how to reduce market exposure without losing control, how to create income you can count on, and how to coordinate withdrawals so your taxes stay predictable. Once your priorities are clear—income, safety, liquidity, or legacy—it becomes much easier to determine whether you should keep the SEP IRA invested, reposition part of it into guarantees, or blend strategies for a more resilient plan.