simplified employee pension plan

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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 plan (SEP)

A special type of joint Keogh plan-individual retirement account that is created for employees by employers and that permits contributions from each party. The SEP was developed to give small businesses a retirement plan easier to establish and administer than an ordinary pension plan.

Simplified employee pension plan (SEP).

An SEP is a qualified retirement plan set up as an individual retirement arrangement (IRA) in an employee's name.

You can establish an SEP for yourself if you own a small business, or you may participate as an employee if you work for a company that sponsors such a plan.

The federal government sets the requirements for participation, the maximum annual contribution limits, and the rules governing withdrawals.

References in periodicals archive ?
Simplified Employee Pension Plans (SEP) are available for small business owners to contribute to their individual and their employees' IRAs.
This article focuses on the three most popular types of tax-favored retirement plans for small firms: simplified employee pension plans, commonly called "SEPs;" savings incentive match plans for employees of small employers, referred to as "SIMPLE IRAs" and "SIMPLE 401(k) plans;" and qualified profit-sharing plans.
The exclusion does not apply to distributions made from simplified employee pension plans (SEPS) or Simple IRAs.
408(k)(2)(C) compensation amount for simplified employee pension plans remains unchanged, at $450.
It is available only in individual retirement accounts or simplified employee pension plans.
Simplified Employee Pension plans (SEP) allows annual contributions of 25 percent of net earnings (up to $40,000) that's tax-free.
Instead, you will need to learn about tax-deductible vehicles such as Keogh plans and simplified employee pension plans, as well as the traditional individual retirement accounts.
Your two main options are Keogh and Simplified Employee Pension Plans (SEPs).
The new Employer Retirement Savings Accounts (ERSAs) would replace 401(k) plans, 403(b) plans, SIMPLE 401(k) plans, governmental 457 plans, Salary Reductions Simplified Employee Pension plans (SARSEPs), and SIMPLE IRAs.
In addition to the SIMPLE-IRA, Fidelity's small business retirement plans include Simplified Employee Pension plans (SEP-IRAs), Keoghs, and 401(k)s for small companies.

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