Simplified Employee Pension (SEP)

What is an SEP Plan?

A type of retirement plan designed for employers that wish to establish and contribute to a retirement plan for their employees while keeping plan administration responsibilities to a minimum.

Who should have an SEP plan?

The SEP plan was specifically created for self-employed people and small-business owners. Any employer, including a sole proprietor with no employees, can set up an SEP plan. Contributions are deposited into employees’ Traditional IRAs and are tax deductible.

What is the maximum allowable SEP plan contribution?

The maximum amount that can be contributed annually is based on a per-participant limit of the lesser of 25% of an employee’s compensation, where the compensation is capped or $53,000 for 2015. The maximum compensation on which contributions can be based is $265,000 for 2015. Generally, any employee who is at least age 21 and performed services for their employer during three of the last five years is eligible to participate in the employer’s SEP plan.

Find out how FedChoice can help you build your own SEP plan.


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