All eligible employees must open an IRA to receive the employer’s contribution to the SEP. If the employee does not open an IRA account, the employer must open one for them. The employee must be at least 21 years old and have worked during three of the last five years for the employer and have earned at least $550. All eligible employees must participate as well as the employer.



Employer Contributions



The employer may contribute between 0-15 percent of the employee’s total compensation to a maximum of $52,000. Contributions to all SEP IRA’s, including the employer’s SEP IRA must be made at the same rate. An employee who is over 701/2 must also participate and receive a contribution. All eligible employees are immediately vested in the employer’s contributions to the plan.





SEP IRA Taxation

Related Articles
  1. Retirement

    SIMPLE IRA Contribution Limits in 2016

    Learn the SIMPLE IRA contribution limits for 2016, with a brief summary of how the plan works, including eligibility and contribution and distribution rules.
  2. Retirement

    Business Owners: How To Set Up An SEP IRA

    SEP IRAs are simple to set up and run, making them a popular choice for business owners.
  3. Retirement

    SEP IRAs: Introduction

    By Denise Appleby What Is a Simplified Employee Pension (SEP) Plan?An SEP is a retirement plan established by employers, including self-employed individuals (sole proprietorships or partnerships). ...
  4. Retirement

    SEP IRAs: Conclusion

    By Denise Appleby Simplified Employee Pension (SEP) IRA is an IRA-based employer-sponsored retirement plan. A business owner who adopts a SEP for his or her business will be solely responsible ...
  5. Retirement

    Analyzing The Best Retirement Plans And Investment Options: Individual Retirement Accounts (IRAs)

    What they are: An individual savings account with tax incentives. Pros: Tax benefits - investments grow tax-deferred and contributions may be deductible; variety of investment options ...
  6. Retirement

    401(k) And Qualified Plans: Contributions

    By Denise ApplebyA qualified plan may be funded by both employer and employee contributions. Contributions are mandatory for some plans and discretionary for others, but the limits on employer ...
  7. Retirement

    SIMPLE IRA Tutorial

    This comprehensive guide goes through what a SIMPLE IRA is, how to set one up, contribute to it and withdraw from it.
  8. Retirement

    SIMPLE IRA Vs SIMPLE 401(k) Plans

    See the differences that may cause an employer to choose one plan over the other.
  9. Retirement

    SIMPLE IRAs: Conclusion

    By Denise Appleby Savings incentive match plan for employees (SIMPLE) is an IRA-based employer plan under which eligible employees are allowed to make contributions to their SIMPLE IRAs, and ...
  10. Retirement

    Deferred Compensation Plans for Small Business Owners

    Find out the best tax-qualified options business owners can use to defer their compensation and accumulate capital for their retirement.
Trading Center