Simplified Employee Pension (SEP) Plan
A SEP plan
is an employer-sponsored, tax-favored retirement plan that offers small
businesses an attractive alternative to standard profit sharing plans
In a simplified employee pension (SEP) plan, an employer
deposits contributions into the IRA accounts of each participant rather than
into an employer trust account, thereby simplifying the accounting process.
Advantages to establishing a SEP:
- Easy setup
- Contributions are tax deductible to the employer
and all earnings are tax deferred for employees.
- Minimal administrative costs
- Contribution flexibility: Employers can make
annual discretionary contributions of up to 25% of each eligible employee’s
- Tax-planning flexibility: SEP plans can be
established until tax-filing deadlines, including extensions
- Investment flexibility: Because employees can choose where their
accounts are established, they may have a wide range of investments from which to
Frequently Asked Questions:
If a business owner later decides that another type of plan
best suits his or her needs, can the employee's SEP IRA account balances be
rolled over into a qualified retirement plan?
Yes, SEP IRA assets can be rolled over into a qualified retirement
plan provided the plan accepts rollovers.
If a person has a side business, but is covered by a
retirement plan at his or her regular job, can he or she deduct SEP IRA
contributions made based on his or her compensation from the side business?
SEP contributions are fully deductible (within allowable
limits) regardless of active participant status in other company-sponsored
At Craig Wealth Advisors we further simplify the
administration of your SEP plan. As the plan’s custodian, we will receive
contributions, provide detailed records of transactions, prepare statements
reflecting all assets, make distributions and handle the tax-reporting
functions. You and your employees will receive consolidated statements
reflecting all pertinent account activity during the year. This is just another way Craig Wealth Advisors makes having a retirement plan for your business simple and
To learn if a SEP plan is appropriate for your business, contact us!