Understanding the SEP IRA Accounts

 SEP IRA accounts offer numerous advantages , including the fact that the money is fully vested on contribution. Small businesses applaude the flexibility and smaller expense of the program , and the simplicity of administrating it. They can offer SEP IRA accounts to their employees as a component of a benefits package, attracting better, more qualified individuals to their job openings . The business may even be eligible for a tax credit of as much as $500 per year for the first three years the plan is established, offsetting the set up and operating expense . With the SEP IRA accounts the employer will contribute directly into traditional type individual retirement accounts grouped together in the program for all the eligible employees. The plan does not have big start up and management costs , and allows for higher contribution limits of up to 25% of every employee’s wages , so it’s a quick way to grow retirement savings in a tax-sheltered environment. The SEP IRA accounts may be transferred into a different employer’s qualified retirement account should there be a job change, and the portability of the plan also allows the SEP IRA accounts to be rolled over into a different IRA. . An eligible employee needs to be at least 21 years of age , have worked for the employer for three of the last five years, and received compensation of $550 minimum. There is a requirement in the SEP to offer consistant benefit to all eligible employees. Under the plan, an employee is regarded as someone who works for the company , the employer-owner, or a self-employed person who has earned income. Simplified Employee Pension Plans, commonly known as SEP IRA accounts can deliver a reliable source of income at retirement by allowing employers to contribute money in retirement accounts on behalf of their employees and for themselves. SEP IRA accounts work well for LLCs, partnerships, sole proprietorships and both S and C corporations. Look into the benefits today!

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