Plans With IRAs

Simplified Employee Pension (SEP)

A Simplified Employee Pension (SEP) plan can provide a significant source of income at retirement by allowing employers to set aside money for themselves and their employees. 

Get information on establishing a SEP plan on IRS.gov or consult your benefit plan advisor.

SEP Retirement Plans for Small Businesses (.pdf file)
  • Can be set up by any employer
  • Participant's retirement benefits based on participant’s account balance
  • Employer can decide each year whether and how much to contribute
  • Only the employer is allowed to contribute to the plan on behalf of employees, up to the lesser of 25% of an employee’s compensation or $50,0001
  • Must cover all employees who are at least 21 years of age and have been employed in 3 of the last 5 years with compensation of at least $5501
  • Easy to set up and operate
  • No annual return required
  • Annual nondiscrimination testing not required
  • Little design flexibility
  • Employees may not take loans from the plan
  • Employees may withdraw their balance at any time, subject to tax
  • Immediate vesting in full account balance
1Dollar limits are for 2012 and are subject to cost-of-living adjustments for future years.

SEP Plan Checklist to maintain your plan (.pdf file)

 

 

 

SEP Plan Fix-It Guide to correct your  plan

 

 

 

ADDITIONAL RESOURCES