Simplified Employee Pension


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Simplified Employee Pension (SEP) plan

A pension plan in which both the employee and the employer contribute to an individual retirement account. Also available to the self-employed.

Simplified Employee Pension Plan

Also called a SEP IRA. A retirement plan designed for persons with self-employed income and their employees. It operates like an IRA: it has contribution limits and may be invested in securities. When an employer sets up an SEP, he/she creates a different account for each employee and puts a certain percentage of each person's income into these accounts. The percentage must be the same for the employer and all employees (although the dollar amounts will differ because of different levels of compensation). The employer makes all contributions, which are tax deductible for him/her; when the employee makes withdrawals upon retirement, the withdrawals are tax-free. SEPs may exist side-by-side with 401(k)s.

Simplified Employee Pension (SEP)

An arrangement under which an employer makes contributions to an employee's individual retirement account (IRA), or a self-employed person contributes to his own plan.
References in periodicals archive ?
He should structure and place 10% of his earnings in a simplified employee pension plan (SEP), which works in a way similar to an IRA.
Emerging growth companies have access to a variety of plan types including Simplified Employee Pension (SEP) Plans, SIMPLE IRA, 401(k), Safe Harbor 401(k), Money Purchase Plans and Profit Sharing Plans.
In that event, you still can create a simplified employee pension plan (SEP) for 1998," says Willock.
make deductible contributions to a simplified employee pension
already existing or create a new Simplified Employee Pension
However, the amendment does not change the required beginning date for distributions from an individual retirement account (IRA), including an IRA established with a simplified employee pension or savings investment match plan for employees.
When considering retirement plans, there are a number of options, including the typical and widely used 401 (k) plans, the Simplified Employee Pension Plan (SEP-IRA) and the new retirement plan option called Savings Incentive Match Plan for Employees (SIMPLE).
Plan choices are many -- and diverse: Simplified Employee Pension, 401(k), Individual Retirement Account, Defined Benefit Plan, Defined Contribution Plan, Keogh Plan, Simple IRA, and more.
A simplified employee pension (SEP) plan can be set up in the following year-as late as the extended due date for the return-and still generate a current-year tax return deduction.
The Simplified Employee Pension (SEP), sometimes called the SEP-IRA, is similar to a Keogh (the profit-sharing variety) but simpler to set up and administer--more, in fact, like an IRA.
For example, how many taxpayers keep continuous annual records of the amounts contributed to their respective corporate or self-maintained (Keogh, 401(k), simplified employee pension, IRA, etc.

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