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-deferred growth, tax-deductible contributions
Must be sole proprietor, a business owner, in a partnership, or earn self-employment income by providing a service
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.
Normally April 15th , tax filing deadline for most self-employed individuals and small-business owners (including any extensions)
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