Saving for retirement is important for business owners. However, traditional Individual Retirement Accounts or Annuity (IRA) may not be suitable for your needs. Instead, a SEP IRA may be right for you.
What Is an SEP IRA Plan?
An SEP plan allows business owners simplified ways to contribute to retirement accounts. These accounts can be for both their employees and their own personal retirement.
Is an SEP Plan Regulated?
An SEP plan is regulated and follows similar rules for investment, rollover and distribution that traditional IRAs must follow.
Who Is Eligible to Begin an SEP Plan?
You must be an employer to begin an SEP plans. Self-employed individuals qualify as employers.
Which Employees Are Eligible?
Not all of your employees will be eligible for an SEP plan. To qualify, your employees have to be at least 21 and make at least $600 during the past year of employment at your company. They also have to have worked for your company for the past three years.
What Type of Institutions Set up SEP Plans?
An SEP plan can be established at any IRS approved institution that also offers traditional IRAs. These include banks, brokerage companies, and insurance companies.
Who Controls Each SEP Plan?
Each SEP Plan that you set up for an eligible employee is owned by the employee. If you set up a SEP plan for your own retirement, then you control that account.
SEP Plan Employer Contributions
Each time you make a contribution to your own SEP Plan, you must make contributions to any employee SEP (Simplified Employee Pension) IRA that you have created.
