The SEP offers a simple, straightforward way to contribute toward your own and your employees’ retirement without introducing numerous administrative costs.You’ll have to put together a formal written agreement, and you’ll need to provide benefits to all eligible employees, but you won’t need to file an annual Form 5500 with the IRS.But which one should you choose – and what is the next step?
The SEP offers a simple, straightforward way to contribute toward your own and your employees’ retirement without introducing numerous administrative costs.You’ll have to put together a formal written agreement, and you’ll need to provide benefits to all eligible employees, but you won’t need to file an annual Form 5500 with the IRS.Tags: Essay GuidlinesForming A Business PlanMit Opencourseware Calculus 3How To Write An Essay About My FamilyEssay About DeathThesis FinancialIn School Suspension AssignmentsWhat Is A Watson Glaser Critical Thinking Test
It allows different levels of compensation to different groups within a small business.
If you are reading this, you are probably thinking about putting a plan into place or switching to a retirement program more easily administered than the one you have now?
The classic situation for this plan is when you have a small business whose multiple owners take home similar earnings but are of different ages.
The plan must be tested to meet Internal Revenue Code nondiscrimination requirements, of course.
These plans include simplified employee pensions (SEP-IRAs), solo 401(k) plans for the self-employed, and the Simple IRA.
Each plan is relatively inexpensive and includes features that make it more or less suitable for different kinds of small businesses.Under a SEP, the employer sets up an individual retirement account (IRA) for each eligible employee, which the employee owns and controls, but only the employer contributes funds.As the employer, you can contribute funds equal to up to 25% of your employee’s compensation or ,000 (for 2019), whichever number is smaller.Additionally, solo 401(k) plans allow you to make tax-deductible profit-sharing contributions equal to 25% of your compensation (corporate entity) or 20% of self-employment income (sole proprietor). These plans do require a TPA (third-party administrator).Ultimately, the Solo 401(k) will allow me to contribute the most pre-tax, but my income has to get me there first 🙂 Here’s one way to compete with larger companies for prime employees.hen I worked for my old brokerage firm, I was a W-2 employee and the retirement plan options were simple.I had the 401k and could also do a Traditional or Roth IRA outside of it.It can be difficult for small-business owners to navigate the complexities involved in choosing a good retirement plan.The goal, of course, is to find a plan that serves your and your employees’ interests without introducing prohibitive costs that negatively impact your business’s bottom line.These plans are very easy to create, and they have very low administrative costs and no annual IRS reporting requirements.You set up traditional IRAs for each eligible employee; they can contribute to the IRA on a tax-deferred basis (via payroll deductions, and you can either match the contributions of plan participants or contribute a fixed percentage of all eligible employees’ pay. I had considered going with the Simple IRA initially, but the one item I didn’t like is that it has a 25% early withdraw penalty for the first two years.