2910 North Swan Road
WHAT IS A SEP IRA:
A Simplified Employee Pension (SEP) plan provides business owners with a simplified method to contribute toward their employees’ retirement as well as their own retirement savings. Contributions are made to an Individual Retirement Account or Annuity (IRA) set up for each plan participant (a SEP-IRA).
A SEP-IRA account is a traditional IRA and follows the same investment, distribution, and rollover rules as traditional IRAs.
The SEP IRA is a retirement plan designed to benefit self employed individuals and small business owners. Sole proprietorship, S and C corporations, partnerships and LLCs qualify.
WHY A SEP IRA:
The SEP IRA has broad appeal due to its high annual contribution limits, completely discretionary and flexible annual contributions and minimal administration. SEP IRA plans can be established by a one person business or by a business owner with employees.
WHAT ARE THE LIMITS:
The limits will depend on the year and calculations.
Contributions to a SEP IRA are generally 100% tax deductible and investment earnings in a SEP IRA grow taxed deferred.
Withdrawals after age 59 ½ are taxed as ordinary income.
Withdrawals prior to age 59 ½ may incur a 10% IRS penalty as well as income taxes.
Generally a SEP must be established and funded by your tax filing deadline. Generally, filing extensions extends the period for establishing and funding the SEP plan. For a sole proprietor April 15th would be the deadline to establish and fund a SEP for the prior tax year. If an extension was filed a sole proprietor can establish and fund a SEP IRA by October 15th.