What is a Simplified Employee Pension Plan (SEP IRA)?

    The SEP IRA is an alternative to more complex employer-sponsored retirement plans. It is designed for employers who want to
    establish and contribute to a retirement plan for employees. It is commonly used by self-employed individuals or employers who don't
    offer other qualified plans.

    SEP IRA

    At A Glance


















    SEP IRA Benefits

    Employer Benefits
    •        Employer contributions to a SEP IRA are tax deductible.
    •        Earnings on employer contributions are not taxable to the corporation.
    •        Attract and retain quality employees.
    •        Improved employee morale, productivity and employer/employee relations.

    Employee Benefits
    •        Employer contributions and employee salary deferrals are not taxed until withdrawn.
    •        Earnings on plan assets are not taxed until withdrawn.
SEP IRA
Who May Establish
 •  All business types.
•  For-profit and not-for-profit organizations of any size.
Administrator Testing
 None.
Establishment
 New plans must be established by the employer’s tax filing due date, plus IRS-
approved filing extensions.ncome or $16,500.
Employer Contributions
 Discretionary annually.
•  Maximum is 20% of adjusted net business income or 25% of W-2.
•  Compensation not to exceed $49,000.
Excludable Employees
 Certain union employees or non-resident alien employees.
Employee Eligibility
Requirements
 •  21 years old.
•  Have worked for the employer for at least three of the immediately preceding five
years.
•  Have earned at least $550 (indexed for inflation) in compensation.
Annual Custodial Fee
 $15
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