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Thus, the employee has the right to take his SEP IRA account money with him whenever he stops working for the company. Any size business can establish a SEP, but the SEP retirement plan is utilized mostly by the self-employed and the small business with few employees. The SEP IRA rules dictate that if the business contributes for one employee, (i.e., the owner), then the business must contribute proportionately for all of the employees. Article: A SEP is a special type of IRA. Under a SEP plan the employer creates an IRA standing for each eligible employee, hence the name SEP-IRA. A SEP is funded solely with employer contributions. Employees do not make contributions to their SEP-IRA retirement account. Any money that goes into a SEP rote belongs to the employee. Thus, the employee has the right to take his SEP IRA regard money with him whenever he stops working for the company. Any size number can establish a SEP, but the SEP retirement plan is utilized mostly by the self-employed and the small play-acting with few employees. The SEP IRA rules dictate that if the joint-stock association contributes for one employee, (i.e., the owner), then the enterprise must contribute proportionately for all of the employees. With few exceptions, anyone who works for the market must be included in the SEP. However, you can exclude from participating in the SEP plan anyone who: 1. Has not worked for the following during three out of the last five years. 2. Has not reached age 21 during the year for which contributions are made. 3. Received less than $450 in compensation (subject to cost-of-living adjustments) during the year. SEP IRA contributions to each employee for 2004 cannot exceed the lesser of $41,000 or 25% of pay for W2 recipients (20% of income for sole proprietors). The SEP IRA contribution limit goes up to $42,000 for 2005, and is subject to cost-of-living adjustments for later years. SEP-IRA rules do not provide for circumstantial catch-up contributions for those 50 years old or over. A growing number of self-employed individuals with no employees are abandoning the SEP-IRA for a newer type of retirement plan the Solo 401(k) or Self-Employed 401(k). The two main reasons for the switch are 1) they can generally contribute much more to a Solo 401(k) than they can under a SEP IRA, and 2) Loans are approved under a Solo 401(k), whereas loans are prohibited under a SEP-IRA. Example: Henry, age 52, a realtor received $60,000 in compensation from self-employment income in 2004. For 2004, he could contribute a maximum of $27,152 in a Solo 401(k) versus a maximum of $11,152 under a SEP IRA. However, the Solo 401(k) does not work for businesses with employees. Thus, if your bevy plans to hire employees or has a handful of employees, the SEP IRA may be your best arbitration as a retirement plan that is inexpensive and simple to operate. HomeTypers.com - Earn 75% Commission! - Get Paid Typing Data! Affiliates Now Earn 75% Commission @ $34 Per Sale! Converting Better Than Ever! WeightLoss eBook :Negative Calorie Foods. - Popular Weight loss Program. 3 Diet Plans, 150 recipes with negative calorie foods! Pictures of Negative Calorie Foods. Article Index: | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 | 21 | 22 | 23 | 24 | 25 | 26 | 27 |
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