Considering a SEP
For An Easy And Low-Cost Retirement Plan?
Looking for an easy and low-cost retirement plan? Why not consider a
Simplified Employee Pension (SEP) plans can provide a significant
source of income at retirement by allowing employers to set aside
money in retirement accounts for themselves and their employees.
Under a SEP, an employer contributes directly to traditional
individual retirement accounts (SEP-IRAs) for all employees
A SEP does not have the start-up and
operating costs of a conventional retirement plan and allows for a
contribution of up to 25 percent of each employee’s pay.
Advantages of a SEP
- Contributions to a SEP are tax deductible and your business pays
no taxes on the earnings on the investments.
- You are not locked into making contributions every year. In fact,
you decide each year whether, and how much, to contribute to your
- Generally, you do not have to file any documents with the
- Sole proprietors, partnerships, and corporations, including S
corporations, can set up SEPs.
- You may be eligible for a tax credit of up to $500 per year for
each of the first 3 years for the cost of starting the plan.
- Administrative costs are low.
As you read through this email, here are some definitions you will
Employee – An “employee” is not only someone who works for you, but
also includes you if you receive compensation from the business. In
other words, you can contribute to a SEP-IRA on your own behalf. The
term also includes employees of certain other businesses you and/or
your family own and certain leased employees.
Eligible Employee – An eligible employee is an employee who:
- Is at least age 21, and
- Has performed service for you in at least 3 of the last 5 years.
All eligible employees must participate in the plan, including
part-time employees, seasonal employees, and employees who die or
terminate employment during the year.
Your SEP may also cover the following employees, but there is no
requirement to cover them:
- Employees covered by a union contract;
- Nonresident alien employees who did not earn income from you;
- Employees who received less than $550 in compensation during the
year (subject to cost-of-living adjustments).
If monies are placed within an Equity Index
Annuity, the Principal
is safe the from the volatility caused by market swings.
As always, we are available for any questions or concerns you may
have. So feel free to call or email us at 925-757-6018 or send me an
Juan Pablo Blanco, Grady Elliott and the Rest of the
Smeed Financial Team
201 Sand Creek Rd. Ste. E
Brentwood, CA 94513