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Welcome to Commonsense Financial Planning.

Common sense answers to questions on financial planning, risk management, and investing.

 

Retirement Plans For Your Business

 
 

SEP Plans

 
 

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SEP Plan Basics:

A SEP provides an employer with a simplified way to make contributions to an employees individual retirement account or individual retirement annuity.

  • Employer contributions are made directly to SEP-IRA's set up for each employee with a bank, insurance company or other financial institution.
  • Contributions are not taxed currently to the employee.
  • Employer contributions are tax deductible.
  • Earnings on contributions are income tax deferred.

Top Heavy Plans

If more than 60% of the plan assets are allocated to "key employees," then the employer must contribute at least as much for "non-key" participants as it does for key employees. This applies only to a contribution of up to the first three percent of includable compensation (may be higher in some cases.)

More about SEP Plans

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