Eligibility

• Only people with an employer that has a SEP IRA option are eligible to have money put in to their account. Anyone whose adjusted gross income does not exceed the annual limits based on his filing status can contribute to a Roth IRA regardless of his employment situation.
  
  

Function

• You determine how much to contribute to your Roth IRA. Your employer does not contribute to your Roth IRA. With a SEP IRA, your employer determines how much to contribute. Only your employer, not you, can contribute to a SEP IRA.
  
  

Contribution Limits

• For 2010, the contribution limit for Roth IRAs equals $5,000 ($6,000 if you are over age 49). For 2010, the contribution limit for SEP IRAs equals the smaller of 25 percent of your compensation or $49,000.
  
  

Tax Breaks

• Contributions made to your SEP IRA are not included in your income. However, you have to report the withdrawals as taxable income when you take out the money at retirement. The IRS offers no tax breaks for contributions made to your Roth IRA. However, the money is withdrawn tax free at retirement.
  
  

Investment Options

• The only banned investment for Roth IRAs is collectible items; otherwise, you have complete control over how you invest your Roth IRA. Your employer decides what investment options are available for your SEP IRA.