Simplified Employee Pensions (SEP) Plans generate employee loyalty and build security for the self employed. A SEP allows you to provide retirement benefits without the expense of having an outside plan administrator.
Setting up an Elevations SEP plan is quick and easy. Then, it’s as simple as making contributions to the Traditional Individual Retirement Accounts (IRAs) of each eligible employee. Once your contribution has been made, you, the employer, have no further responsibility for managing the funds. Each employee directs the investment within his or her own Traditional IRA Account.
- No setup fee for the employer or employee
- SEP plan contributions are tax-deductible for the employer, and contributions made for employees are a business expense that reduces net profits.
- Unlike most retirement plans, SEP plans do not require you to file any additional reports with the government.
Simplified Employee Pension Plan - FAQs:
What is a Simplified Employee Pension Plan (SEP)?
SEP Plans were created to allow self-employed persons, sole proprietorships, partnerships, small busineses, small employee groups, and corporations to provide retirement plans via an easily established and maintained retirement program.
Does the Credit Union offer IRAs that accept SEP contributions?
Yes, the Credit Union offers Traditional IRAs that accept SEP Contributions. SEP Plans that are held in Traditional IRAs follow similar IRS rules to Traditional IRAs. Regular Contributions can be made in addition to SEP Contributions, as long as the funds are kept separate.
How much can be contributed to a SEP Plan?
Contribution limits are the lesser of 25% of your salary or the established annual contribution limit. Contribution limits are set annually by the IRS. Current contribution limits can be viewed at the Internal Revenue Service Website.
Are SEP Plan contributions tax deductible?
Generally, if they were made by your employer, you cannot deduct these contributions. If you made the contributions as a self-employed person they may be deductible. Consult a tax advisor.
Can prior-year contributions to a SEP Plan be made?
Prior year contributions cannot be accepted for SEP accounts; however, if these contributions are processed as a current year contribution, the member can speak with their tax advisor to inform them that the contribution was for the prior-year and the tax advisor can make this change.
How long can SEP Plan contributions be made?
SEP Plan contributions can be made until the employee retires, regardless of age.
How are SEP contributions taxed?
SEP Plan contributions, made by an employer, are not included in the employee's income for tax purposes, and an employee does not pay taxes on the balance in their SEP account(s) until the funds are withdrawn.
Are minimum distributions required on a SEP Plan?
Yes. Distributions are required the year in which you reach the age of 70 1/2.
Does NCUA provide Insurance coverage for SEP IRA's?
SEP IRA's are coverered by the same Insurance rules as IRA's.