Simplified Employee Pension Individual Retirement Arrangement (SEP IRA)

0

A Simplified Employee Pension Individual Retirement Arrangement (SEP IRA) is a variation of the Individual Retirement Account used in the United States. SEP IRAs are adopted by business owners to provide retirement benefits for themselves and their employees. There are no significant administration costs for self-employed person with no employees. If the self-employed person does have employees, all employees must receive the same benefits under a SEP plan. Since SEP IRAs are a type of IRA, funds can be invested the same way as most other IRAs.
The deadline for establishing the plan and making contributions is the filing deadline for the employer’s tax return, including extensions.
The most strict conditions employers may place on employee eligibility are as follows. The employee must be included if they:
attained age 21
have worked for the employer in three of the previous five years
have received at least $600 in compensation for the tax year (2015)
Employers may use less restrictive criteria.
SEP-IRA funds are taxed at ordinary income tax rates when qualified withdrawals are taken after age 59 1/2 (as for traditional IRAs). Contributions to a SEP plan are deductible, lowering a taxpayer’s income tax liability in the contribution year.

see more at wikipedia

Check More at https://gl338-0d598b.pages.infusionsoft.net

Do you have a question about, ‘What is self employed tax?’
Start a conversation on our Live Chat now for information on the best tax services.

Leave A Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.