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SEP-IRA – Simplified Employee Pension Plan

Simplified Employee Pension Plans (SEP-IRAs) help self- employed individuals and small-business owners have access to a tax-deferred benefit when saving for retirement.

Tax benefits:
Tax-deferred growth, tax-deductible contributions

Must be sole proprietor, a business owner, in a partnership, or earn self-employment income by providing a service

Contribution Rules:
Must be made by the employer, can vary each year between 0% – 25% of compensation, maximum limitations apply, and each eligible employee must receive the same percentage.

Establishment Deadline:
Normally April 15th , tax filing deadline for most self-employed individuals and small-business owners (including any extensions)

Administrative Responsibilities:
No plan tax filings with IRS. Employee notification of employer’s contribution.

Employee responsibilities:  Employers must fill out and retain this form in their records. Each employee must open an individual SEP-IRA account

Minimum required distributions starting at age 701⁄2. 10% early withdrawal penalty if under age 591⁄2, subject to certain exceptions

Next Steps:
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