Salary Reduction Simplified Employee Pension Plan - SARSEP

DEFINITION of 'Salary Reduction Simplified Employee Pension Plan - SARSEP'

A plan offered by small companies - typically those with fewer than 25 employees - that allows employees to make pretax contributions to their Individual Retirement Accounts (IRAs) through salary reduction.

BREAKING DOWN 'Salary Reduction Simplified Employee Pension Plan - SARSEP'

Prior to the widespread use of 401(k)s, these plans were seen as a valuable benefit of employment, particularly for employees of small businesses. SARSEPs, as they have affectionately become known, were replaced by another plan (known as "SIMPLE") under the Small Business Job Protection Act of 1996. After 1996, existing plans were allowed to remain in existence, but no new plans were to be created.

RELATED TERMS
  1. SIMPLE IRA

    A retirement plan that can be used by most small businesses with ...
  2. Employee Contribution Plan

    A company-sponsored retirement plan where employees may elect ...
  3. Corporate Pension Plan

    A formal arrangement between a company and its employees - or ...
  4. 401(k) Plan

    A qualified plan established by employers to which eligible employees ...
  5. Qualified Retirement Plan

    A plan that meets requirements of the Internal Revenue Code and ...
  6. Savings Incentive Match Plan For ...

    A retirement plan that may be established by employers, including ...
Related Articles
  1. Professionals

    Other Employer-Sponsored Plans

    Other Employer-Sponsored Plans. Other Employer-Sponsored Plans: Simplified Employee Pension (SEP) IRA, Savings Incentive Match Plans for Employees (SIMPLE) and 457 Governmental Plans
  2. 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.
  3. Term

    What's a Qualified Retirement Plan?

    Employers establish qualified retirement plans to help their employees save money.
  4. Professionals

    Other Qualified Retirement Plans

    FINRA/NASAA Series 26 Section 4 - Other Qualified Retirement Plans. In this section simplified employee pension (SEP) IRAs, savings incentive match plans for employees (SIMPLE), 457 governmental ...
  5. Retirement

    This Is Why Your Employer Should Offer a 401(k)

    Understand the unique benefits that come with a small business offering a retirement savings plan such as a 401(k) to current and future employees.
  6. Retirement

    How Does a Pension Plan Work?

    A pension plan is a savings plan maintained by an employer on behalf of its employees for their retirement.
  7. Entrepreneurship

    Plans The Small-Business Owner Can Establish

    Don't hesitate to adopt a smart plan for you and your employees.
  8. Entrepreneurship

    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.
  9. Professionals

    Qualified Retirement Plans

    NASAA Series 65: Section 14 Qualified Retirement Plans. In this section two types of qualified plans: defined benefit and defined contribution plans.
  10. Professionals

    Qualified Retirement Plans

    FINRA/NASAA Series 66: Section 4 Qualified Retirement Plans. This section discusses two types of qualified retirement plans, defined benefit and defined contribution plans.
RELATED FAQS
  1. What are the contribution limits on a Simple IRA?

    Learn the 2014 contribution limits for investing in a SIMPLE IRA, meant for businesses with 100 or fewer employees to help ... Read Answer >>
  2. How can an entrepreneur save for retirement?

    Learn about the retirement savings plan options for entrepreneurs and small business owners, including administration and ... Read Answer >>
  3. How do I set up a 408(k) plan in my business?

    Understand the necessary steps for setting up a 408(k) retirement plan, and get an overview of the SEP and SIMPLE plan options ... Read Answer >>
  4. When are Simple IRA contributions due?

    Depositing SIMPLE IRA deferred compensation, matching and non-elective contributions when they are due will avoid penalties ... Read Answer >>
  5. What are qualified retirement plan types?

    Understand the different types of qualified retirement plans and what they mean in terms of employee and employer contribution ... Read Answer >>
  6. How does a Simplified Employee Pension (SEP) plan work?

    Learn how small businesses and their employees benefit from a Simplified Employee Pension, or SEP, IRA, and discover how ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center