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SEP is an abbreviation for a simplified employee pension plan.
Simplified Employee Pension plans (SEPs) can provide a significant source of income at retirement by allowing employers to set aside money in retirement accounts for themselves and their employees.
Under a SEP, an employer contributes directly to traditional individual retirement accounts (SEP-IRAs) for all employees (including the employer).
A SEP does not have the start-up and operating costs of a conventional retirement plan and allows for a contribution of up to 25 percent of each employee’s pay. Sole proprietors, partnerships, and corporations, including S corporations, can set up SEPs. Your employer's SEP contributions are excluded from your pay and not included on your W-2 form.

A SIMPLE IRA, or "Savings Incentive Match Plan for Employees Individual Retirement Account", is a type of tax-deferred employer-provided retirement plan in the United States that allows employees to set aside money and invest it to grow for later use.
Specifically, it is a type of Individual Retirement Account (IRA) that is set up to be an employer-provided plan. It is an employer sponsored plan, like more well-known plans such as the 401(k) (profit-sharing plans) and 403(b) (Tax Sheltered Annuity plans), but offers simpler and less costly administration rules.
Like a 401(k) plan, the SIMPLE IRA is funded by a pretax salary reduction. Like other salary reduction contributions, these deductions are subject to social security, medicare, and Federal Unemployment Tax Act taxes. Contribution limits for SIMPLE plans are lower than for most other types of employer-provided retirement plans: $12,000 for the current year with a $2,500 catch up contribution, as compared to $17,500 and a $5,500 catch up contribution for convention defined contribution plans (Section 402(g) limit) like 401(k), 401(a), and 403(b) plans.
In 2014 the limitation remains unchanged at $12,000.

As the surviving spouse who receives a lump-sum IRA distribution upon your spouse's death, you may avoid the tax on this distribution if you made a tax-free rollover into your own IRA account.
Beneficiaries other than the surviving spouse may not use the tax-free rollover option.

For taxpayers who were born after 1935, the lump-sum distribution 5 year averaging option previously reported on IRS Form 4972 is no longer available. For taxpayers born before 1935, the option to use the 10 year averaging on IRS Form 4972 will still be available.

Generally, if the present value of your benefits is less than $5,000, then the old employer may distribute your funds without your consent. If the amount is more than $5,000, you probably have the option to leave your funds in the plan of your former employer.

If you are under age 59 and a half and do not roll over the distribution, then you will be subject to a 10% penalty in addition to the regular income tax on the distribution unless you meet one of these exceptions:
If you are disabled or pay substantial medical expenses with the distribution, or
if you are age 55 or older, you may not have to pay the penalty.
The penalty is calculated on IRS Form 5329.

A pension rollover must be completed by the 60th day following the day on which you received the pension distribution.

You do not have to file IRS Form 5329 if you did a direct rollover.

The codes identify the type of distribution, and whether a Form 5329 penalty is required. Code 1 identifies the distribution as an early distribution with no known exceptions subject to the 10% IRS Form 5329 penalty. Code 2 = early distribution but a exception applies and no penalty lis levied. Code 3 = Disability and no penalty required. Code 4 = Death and no penalty required. Code 5 = Prohibited transaction. Code 6 = Section 1035 tax free exchange. Code 7 = Normal distribution and no penalty required. Code 8 = Excess contribution. Code 9 = Cost of current life insurance protection.. Code A = May be eligible for 5 or 10 year averaging. Code B =designated Roth account distribution. E—Distributions under Employee Plans Compliance Resolution System (EPCRS). F—Charitable gift annuity.G—Direct rollover and rollover contribution. H—Direct rollover of a designated Roth account distribution to a Roth IRA.J—Early distribution from a Roth IRA.L—Loans treated as deemed distributions under section 72(p).N—Recharacterized IRA contribution made for 2011. P—Excess contributions plus earnings/excess deferrals taxable in 2010. Q—Qualified distribution from a Roth IRA. R—Recharacterized IRA contribution made for 2010. S—Early distribution from a SIMPLE IRA in the first 2 years, no known exception. T—Roth IRA distribution, exception applies. U—Dividends distributed from an ESOP under section 404(k). W—Charges or payments for purchasing qualified long-term care insurance contracts under combined arrangements. 5329.

The codes identify the type of distribution, and whether a Form 5329 penalty is required.
Code 1 identifies the distribution as an early distribution with no known exceptions subject to the 10% IRS Form 5329 penalty.
Code 2 = early distribution but a exception applies and no penalty lis levied.
Code 3 = Disability and no penalty required.
Code 4 = Death and no penalty required.
Code 5 = Prohibited transaction.
Code 6 = Section 1035 tax free exchange.
Code 7 = Normal distribution and no penalty required.
Code 8 = Excess contribution.
Code 9 = Cost of current life insurance protection..
Code A = May be eligible for 5 or 10 year averaging.
Code B =designated Roth account distribution.
E—Distributions under Employee Plans Compliance Resolution System (EPCRS).
F—Charitable gift annuity
G—Direct rollover and rollover contribution.
H—Direct rollover of a designated Roth account distribution to a Roth IRA.
J—Early distribution from a Roth IRA.
L—Loans treated as deemed distributions under section 72(p).
N—Re-characterized IRA contribution made for 2012.
P—Excess contributions plus earnings/excess deferrals taxable in 2012.
Q—Qualified distribution from a Roth IRA.
R—Re-characterized IRA contribution made for 2012.
S—Early distribution from a SIMPLE IRA in the first 2 years, no known exception.
T—Roth IRA distribution, exception applies.
U—Dividends distributed from an ESOP under section 404(k).
W—Charges or payments for purchasing qualified long-term care insurance contracts under combined arrangements.