Simplified Employee Pension [SEP / SEP IRA]

SIMPLE - Contribution Info. -

A. Contributions limited to: ● Elective salary reductions contributions made by the employee. ● Matching or Non-Elective contributions by the employer B. Are deductible to an employer if they are made by the due date of the employer's tax return, including extensions.

[SEP / SEP IRA] -

Business owner & any eligible employees create their own IRA account to which the employer deposits SEP contributions. ● Once contributions are deposited, they become the property of the IRA account & are therefore generally subject to the same rules as a Traditional IRA.

[SEP / SEP IRA] - Earnings & Distributions

Contributions are made to the employee's personal IRA account which is subject to the same rules as a Traditional IRA. ● Therefore, the treatment of earnings & withdrawals is the same as with a Traditional IRA.

SIMPLE - Rollovers -

Distributions from a SIMPLE IRA may be rolled over into other types of retirement plans after the employee has participated in the plan for at least 2 years. Distributions within the first 2 years may only be rolled over to another SIMPLE plan.

SIMPLE - Contribution Info. Matching or Non-Elective contributions by the employer

Employers may choose to make: 1) matching contributions based on the elective contributions made by employees of up to 3% of compensation 2) non-elective contributions of a straight 2% of compensation to each eligible employee

[SEP / SEP IRA] - Eligibility

Employers must make contributions for employees who are eligible. Employees are eligible to participate if: ● They are 21 years of age or older ● They have worked for the employer during at least 3 of the preceding 5 years ● They have received at least $550 in wages for the current tax year.

[SEP / SEP IRA] - Plan Designed for

Small business owners & their employees. Employers make contribution to personal IRA accounts which are owned & controlled by employees themselves.

SIMPLE - Contribution Info. Elective salary reductions contributions made by the employee.

Such contributions may be made up to annual limits. Individuals who are 50 years of age or over may contribute an additional "catch-up" amount Year 2009 - 2012 Maximum Contribution - $11,5000 Catch-up Contribution - $2,500

[SEP / SEP IRA] - Contribution Limitations

Year 2009 -2011 Maximum Contribution - $49,000 Year 2012 Maximum Contribution - $50,000

[SEP / SEP IRA] - is a type of

retirement plan used by small business owners to provide retirement benefits for themselves & their employees.

Rollover IRA -

● A Rollover IRA is simply a Traditional IRA holding money from a distribution from a qualified plan or 403(b) plan. ● It is used as a "conduit" between retirement accounts. ● As long as assets are not mixed with other contributions, they can later be rolled over into another qualified plan or 403(b) plan.

SIMPLE - Earnings & Distributions -

● Contributions are made to the employee's personal IRA account which is subject to the same rules as a Traditional IRA. ● Therefore, the treatment of earnings & withdrawals is the same as a Traditional IRA. ● However, the 10% penalty for early distributions from a SIMPLE IRA is increased to 25% if the early distribution is made within the first 2 years.

[SEP / SEP IRA] - Contribution Information -

● Contributions are tax deductible for the employer. ● Contributions are discretionary & may vary from year to year. ● Employees are 100% vested in the contributions made by the employer. ● Employees may make their own additional contributions to their accounts under this plan in accordance with Traditional IRA regulations & limitations. ● Contribution Limitations.

SIMPLE - Eligibility

● Employers must set up an account & make contributions of all eligible employees. ● Employees are eligible to participate if they receive $5,000 or more in compensation from the employer during each of the last 2 calendar years & are reasonably expected to receive $5,000 or more in compensation during the current calendar year.

The Savings Incentive Match Plan for Employees [SIMPLE] - A SIMPLE plan is another retirement plan that provides a simplified way for small employers & their employees to contribute toward retirement.

● Like the SEP, the SIMPLE plan allows employers a tax deduction for contributions they make to the SIMPLE IRA plan. ● However, the SIMPLE also allows eligible employees to make elective salary deferrals of their pre-tax compensation to the plan. ● This plan is similar to a 401[k] type plan but offers simpler & less costly administration. ● In order to set up a SIMPLE plan, an employer may not concurrently have another retirement plan.

SIMPLE - Plan Designed For:

● Small business owners & their employees. ● Unlike SEPs, SIMPLE plans are limited to small employers with 100 or fewer employees.

[SEP / SEP IRA] - Advantage

● lows cost of administration ● the tax-deductible nature of contributions