Self-employed workers wishing to save hefty amounts for retirement may wish to consider a Simplified Employee Pension Plan or SEP IRA.

Designed for sole proprietors and small businesses, the SEP IRA boasts funding limits that are more generous than the traditional or Roth IRA. Plus, they're flexible.

Contribution limits for the SEP IRA max out at 25 percent of compensation, not exceeding $45,000. Earnings grow tax-deferred, meaning the IRS doesn't get paid until assets are withdrawn.

So if you stash the maximum $45,000, and earn 8 percent annually, you'd have more than $650,000 saved up in 10 years. That kind of earning potential makes the SEP IRA a smart choice, says Certified Financial Planner Dee Lee, author of "Let's Talk Money."

Lee should know. She's stashed her own retirement savings in an SEP IRA.

"What I like best is there is no IRS annual reporting required for the SEP IRA like there is with a 401(k)," she says.

If you contribute to an SEP for yourself and you have employees, then you must include them in the plan, but contributions are deductible as a business expense, and there are no requirements to make substantial contributions. Employees are fully vested from day one.

Meanwhile, employees at businesses that offer an SEP cannot save their own earnings in the accounts. Instead, they can fund a traditional or deductible IRA outside of work.