SEP IRA Plans
An eligible employee is an individual (including a self-employed individual) who meets all the following requirements:
- Has reached age 21
- Has worked for the employer in at least 3 of the last 5 years
- Received at least $600 in compensation from the employer during the year (for 2018)
An employer can use less restrictive participation requirements than those listed, but not more restrictive ones.
An employer can exclude the following employees from a SEP or SARSEP:
- Employees covered by a union agreement and whose retirement benefits were bargained for in good faith by the employees’ union and the employer
- Nonresident alien employees who do not have U.S. wages, salaries or other personal services compensation from the employer
A SEP-IRA must be set up by or for each eligible employee. They may be set up with banks, insurance companies or other qualified financial institutions. All SEP contributions must go to traditional IRAs. Employees are responsible for making investment decisions about their SEP-IRA accounts.
You and your employees will receive a statement from the financial institutions investing your SEP contributions both at the time you make the first SEP contributions and at least once a year after that. Each institution must provide a plain-language explanation of any fees and commissions it imposes on SEP assets withdrawn before the expiration of a specified period of time.
You can set up a SEP for a year as late as the due date (including extensions) of your business income tax return for the year you want to establish the plan.
Investment advisory services offered through Allmerits Asset Management, LLC, a Registered Investment Adviser firm. Allmerits Asset Management does not provide legal or tax advice. Investment Adviser Representatives of Allmerits Asset Management may only conduct business with residents of the states and jurisdictions in which they are properly registered or exempt from registration requirements. Insurance and Annuity products are sold separately through Allmerits Financial and Insurance Service. Securities transactions for Allmerits Asset Management clients are through Trust Company of America, TD Ameritrade, Nationwide, John Hancock and American Funds.