Simplified Employee Pension Plans

Simplified Employee Pension Plans are employer funded plans, which an employer makes contributions to an employee’s SEP-IRA. The primary reason a business owner sets up a SEP is to establish an easy-to-administer retirement plan.

Who can establish an SEP Plan:

  • Sole Propietorships
  • Partnerships
  • Corporations
  • Tax-exempt organzations

3 options for setting up the plan:

  1. Execute the IRS Model Agreement, form 5305-SEP
  2. Execute a master plan, which has received a favorable opinion letter from the IRS
  3. Execute a custom design plan

Who can participate in a SEP?

Every employee who is age 21 or during the year for which contributions are made and who has performed services:

  • Ineligible Employers
  • Maintain another qualified plan
  • Use the services of leased employess
  • Have an eligible employee who has not established an IRA
  • Are part of an affiliated service group
  • Wish to integrate SEP contributions with Social Security
  • Do not pay the cost of SEP contributions