Retirement Plans For Your Business

Additional Considerations for SEP Plans:

• Annual Contribution: No annual contribution is required. If a contribution is made and IRS Form 5305 is used as the plan document, the allocation must be the same for all eligible employees. Allocation formulas which favor older employees may not be used.
• Individual Limits: The allocation of employer contributions to a participant's account may not exceed the lesser of 15% of compensation or $30,000. For the self-employed, these values are 13.0435% and $30,000. For 1998 the maximum amount of compensation which may be considered in this calculation is $160,000. Thus the maximum allocation to a SEP for an employee is $24,000; for a self employed person, the limit is $20,870.
• Time of Contribution: Contributions must be made by the due date,(plus any extensions) of the employers tax return.
• Vesting: Vesting must always be 100%.
• Who May Participate: Any employee who is at least 21 years of age and has performed service in at least three of the last five calendar years must be permitted to participate under the SEP unless his or her total compensation was less than $400 (subject to change as indexed for inflation) for the year.
• Investment of Plan Assets: Plan assets can be invested in most equity products or debt instruments but may not be invested in life insurance, hard assets, or collectibles, (except for U. S. gold and silver coins.) Participants direct the investment of funds contributed on their behalf .

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