SEP
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:
- Execute the IRS Model Agreement, form 5305-SEP
- Execute a master plan, which has received a favorable opinion letter from the IRS
- 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