Simplified Employee Pension (SEP)

SEP IRA plans can provide a large amount of funds available for retirement. Up to 25% of compensation ($54,000 max for 2017) can be added to this plan annually. SEPs do not have any startup costs or administrative fees making the setup process rather simple.

In this type of plan, the employee does not contribute to the SEP – only the employer makes contributions. The percentage of salary contributed must be the same for all employees. Each employee would open a SEP with a brokerage company such as TD Ameritrade, Fidelity or Vanguard (among others).

An employee must have worked for the employer in at least 3 of the last 5 years and received at least $600 per year in compensation. An Employer can reduce these requirements at the setup of the plan.

It is great that you are choosing to offer a retirement plan for your employees but remember that you should also choose your investment options carefully. Pay close attention to price versus performance. For every percent that you spend in fees, that is less money available to you and your employees at retirement. We would be happy to help you set up a SEP IRA retirement plan for your business.

Visit the IRS website to learn more or Contact Us for more information on how to set up a SEP IRA.

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