February 24th, 2005, 07:10 PM
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JRami Consulting
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Join Date: January 18th, 2005
Location: Florida
Posts: 3,317
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Sep Accounts - Simplified Employee Pensions
Hurry, you still have until April 15!
Sep Accounts - Simplified Employee Pensions
A Simplified Employee Pension Plan, commonly known as a SEP-IRA, is a retirement plan specifically designed for self-employed people and small-business owners. Its key features are highlighted below. When establishing a SEP-IRA plan for your business, you and any eligible employees establish your own separate SEP-IRA; employer contributions are then made into each eligible employee’s SEP-IRA.
SEP-IRA deadline
The deadline to open and contribute to a SEP-IRA is:
• Your tax filing deadline (including any extensions).
• For most self-employed individuals and small-business owners, that deadline is usually April 15.
No annual contribution required
• Contribution percentage can vary each year, from 0% - 25% of compensation, up to $41,000 per participant for the 2004 plan year and $42,000 for the 2005 plan year.*
• All SEP-IRA contributions must be made by the employer, and the same percentage of compensation must be contributed for each eligible employee (based on W-2 wages) including the employer.
How Much Can You Contribute?
• Self-Employed 401(k) The combination of your profit sharing and 401(k) salary deferral contributions cannot exceed $41,000 for the 2004 plan year and $42,000 for the 2005 plan year. Individuals 50 or older may defer an additional $3,000 for 2004 and $4,000 for 2005 in 401(k) catch up contributions – for a maximum contribution amount of $44,000 for 2004 and $46,000 for 2005.
• Stand-Alone Profit Sharing Plan or Money Purchase Plan Your contribution can be up to 25% of compensation, not to exceed $41,000 for the 2004 plan year and $42,000 for the 2005 plan year*.
http://www.dol.gov/ebsa/Publication...e_pensions.html
http://personal.fidelity.com/global...n=sep%20account
( disclosure: I have no relation to the company mentioned or to the government. However, I have saved big bucks through my own corp from my yearly taxes in the past 4 years and for my retirement. But of course, must see your own CPA, for help setting up )
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February 25th, 2005, 03:05 PM
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Join Date: January 18th, 2005
Location: Mansfield, TX
Posts: 10,967
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If you have employees, you can contribute up to 25% for them. For yourself, you can only contribute up to 20% of your profit. (That's because the contributions reduce your earnings, so when you contribute 20% it's effectively 25% of the reduced amount.)
This is an incredible deal for the self employed. Traditional IRA's and even 401k's have relatively low limits. With an SEP IRA, you can sock away up to $41,000 per year towards retirement (assuming you're making $205,000 or more).
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February 25th, 2005, 06:59 PM
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ABW Ambassador
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Join Date: January 18th, 2005
Posts: 821
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Yes, you guy's and gals should look into this. I just spoke with my financial advisor about it today after my tax person suggested it. Good way to keep money for retirement and not giving it all to the IRS.
Last edited by dflsports : February 25th, 2005 at 06:59 PM.
Reason: spelling error
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February 26th, 2005, 01:42 PM
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Prince of Content
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Join Date: January 18th, 2005
Location: In a House
Posts: 2,788
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Just read all about them in David Bach's book "start late finish rich" It is a must read as is all his stuff. This book is like my bible
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February 27th, 2005, 10:06 AM
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ABW Ambassador
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Join Date: January 18th, 2005
Posts: 746
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Quote:
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Originally Posted by nyfalcon
Just read all about them in David Bach's book "start late finish rich" It is a must read as is all his stuff. This book is like my bible
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I am in the process of reading that book, too. It's interesting. |
March 27th, 2007, 04:36 PM
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Join Date: January 18th, 2005
Location: Mansfield, TX
Posts: 10,967
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Just wanted to bump this as a reminder to everyone...
If you haven't set up an SEP IRA or haven't contributed yet for 2006, you have until April 17th this year and the limit is $44,000 (or 20% of your net income, whichever is less).
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May 3rd, 2007, 11:54 AM
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Verbosely Virtuous Mutt
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Join Date: June 8th, 2006
Posts: 679
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Anyone know if I, as a non-incorporated self-employed affiliate with no other employees, can I roll over all the money in my traditional IRA that I already had before I started working for myself, into a SEP-IRA? I know it's too late for 2006. But I must say, only being able to deduct $4000/year for a traditional IRA, compared to $44,000 for a SEP-IRA... obviously there's no comparison!!
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May 3rd, 2007, 02:47 PM
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Join Date: January 18th, 2005
Location: Mansfield, TX
Posts: 10,967
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As long as you're not talking about Roth-type IRAs, you should be able to roll them together. Talk with your broker and/or tax accountant.
Also, it's not too late for 2006 IF you filed for an extension. You have until you actually file to fund. So if you filed on 4/17/07, you have until then. If you filed an extension and file your returns on 10/15/07, you have until then to fund your 2006 contribution.
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