What Is A Sep IRA?
Some of you have heard something about this retirement plan available to businesses called SEP IRA, but what is it you ask? Sep Ira is an acronym that means Simplified Employee Pension Individual Retirement Account. This is a special variation of a regular kind of IRA that is available to businesses in the United States. Business owners can use it to provide retirement benefits for the business owners and their employees. One of the really cool things about it is that there are no significant administration costs for self-employed person with no employees. Even a self-employed person can use it. If they do have employees, all employees get the same benefits under the Sep IRA. That is a requirement. SEP accounts are treated as IRAs, because that is what they are and funds are invested in the same way as any other IRA.
There is a specific deadline for the establishment of a SEP. There is also specified limits to the about of contributions and deadlines for when they can be made.
The maximum contribution is the lesser of 25% of the employees income not to exceed a specific dollar amount that has steadily increased every year since 2005. For a self-employed person the maximum percentage of approximately 18.6% of "net income". This differs from that of a regular kind of employee and is only slightly more complicated to compute.
One of the interesting things about a Sep Ira is that the contribution by the business owner is discretionary every year. This means that the owner can decide each year whether or not to contribute to the Sep Ira. The decision has to be made by the deadline date and must include all employee accounts. Administrating a Sep Ira is pretty much like managing any other kind of IRA. The business owner "could" do it himself. Most business owners, however, prefer to hire a company that specializes in doing that for companies. That way the business owner is freed of another administration task to do. The companies have very competitive prices to keep the cost down for the business owner. In supporting articles I will expand on more information on Sep Ira's to more clearly help you to understand the sep ira contribution, Sep Ira withdraw, early withdrawl penalties, Sep Ira worksheets, Sep Ira rem, and information on 401k tpa. My purpose is to put all the pertinent information all in one place so you don't have to spend your valuable time researching all over the place to find this information.
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