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 ?
A simplified employee pension (SEP) is essentially a series of IRAs established by an employer for its employees to receive employer contributions.
Those earnings, in turn, can be sheltered from tax by a simplified employee pension (SEP) plan.
If you didn't max out your retirement plan contributions in 1999, you still can make 1999 contributions to an individual retirement account (IRA), simplified employee pension (SEP), and Keogh as late as your tax-filing date plus extensions.
Previous plans that provided for elective deferrals by employees and contributions by employers were either a salary reduction simplified employee pension (SARSEP), or a qualified cash or deferred arrangement (401 (k)).
(That includes any money in simplified employee pension (SEP)-IRAs or SIMPLE IRAs.) If you have multiple IRAs, you'll owe the same amount of tax no matter which one or ones you tap for a withdrawal.
408(k)(2)(C) compensation amount for simplified employee pension plans remains unchanged, at $450.
In this section, the savings incentive match plan for employees (Simple IRA) has more pages devoted to it than to simplified employee pension (SEP) plans or to section 403(b) tax-sheltered annuities.
"A retirement plan might be funded by the firm--mine is--using a profit-sharing plan, simplified employee pension plan or simple contributions.
Assessing the couple's situation, Woods says, "They were saving for short-term emergencies, but we had to first set up a SEP IRA for Jacqueline." A Simplified Employee Pension IRA allows an employer--or in Jacqueline's case, a self-employed person--to contribute up to 25% of their compensation or $40,000--whichever is less--into an investment account for retirement.
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.
The choices include 401(k), profit sharing, defined benefit, and simplified employee pension (SEP) plans.
is self-employed, she contribute to a simplified employee pension (SEP-IRA).

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