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

    Is a SIMPLE IRA Right for Your Small Business?

    Here's how small businesses can benefit from offering a SIMPLE IRA to their employees.
  3. Retirement

    Is a Vanguard SEP IRA Account Right for You?

    Learn about the SEP IRA offered by Vanguard and why it is one of the best SEP products available, including why it's a good fit for small business owners.
  4. Small Business

    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.
  5. Retirement

    Making Spousal IRA Contributions

    Eligibility requirements, contribution limits and tax deductions all change with one little ring.
Frequently Asked Questions
  1. What are Common Examples of Monopolistic Markets?

    Discover what causes real instances of market monopoly, how it persists and where monopoly privilege is most common in the ...
  2. What is the gold standard?

    The gold standard is a monetary system where a country's currency or paper money has a value directly linked to gold, but ...
  3. What's the most expensive stock of all time?

    The most expensive publicly traded stock of all time is Warren Buffett’s Berkshire Hathaway.
  4. What is a "socially responsible" mutual fund?

    As the name suggests, socially responsible mutual funds invest exclusively in socially responsible investments.
Trading Center