Simplified Employee Pension Plan (SEP IRA) is designed for small businesses or self-employed person to set up a retirement plan for themselves and all employees who meet the qualifications. See a Civic Banker to help set up your SEP IRA today.
SEP IRA Features:
- Contributions that are tax-deductible as a business expense
- An effective way for business owners and self-employed individuals to build their retirement savings
SEP IRA Eligibility Requirements
- Any self-employed individual, whether incorporated or not, qualifies to contribute to the SEP IRA
- Employers do not have to have employees to qualify for a SEP IRA the employer may be the only “employee”. However if the employer does have employees, then the employer must contribute for all eligible employees
- Employees must meet all the eligibility requirements set by the employer before the employer is required to make a contribution.
- Employee must be at least 21 years of age, employer must contribute for employees and employers over the age of 70 1/2, even though the employee must immediately begin taking distributions.
The amount withdrawn will be taxable to the employee. And, if the employee is under the age of 59 1/2, IRS penalties and early withdrawal CD penalties will apply unless the employee meets one of the IRS approved exceptions.
Maximum Annual Contributions Levels
Employers can contribute up to 25% of each participant’s annual compensation or $49,000, whichever is less.