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SEP Contributions


Guest LSULLIVAN
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Guest LSULLIVAN

Can someone confirm whether or not a SEP is solely funded by employer contributions. Are employee contributions allowed?

If only employer, does the employer decide how much to contribute and am I correct in saying this amount would be contributed to every eligible employee

If both contributions are allowed, is the employer only contributing to whomever is deferring slary??

Thank you for any help.

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SEPS are funded solely by Employer Contributions unless the SEP is a SARSEP which allows for employee deferrals however SARSEPS are nolonger allowed to be established. Only plans existing prior to 1997 may continue.

The employer sets the contribution rate within the allowed limits ( 25% of Comp) however a specific dollar amount across the board is allowed if stated in the plan document. Self-Employeds are subject to earned income calculation. Integration is allowed in Prototypes and individually designed plans.

A SEP plan may be set up on a Pre-approved document 5305-SEP or on a prototype or individually designed document.

See IRS Pub 560 & 590 for additional details.

As SEPs are funded through Traditional IRAs, the accounts may accept Traditional IRA contributions as well as Rollovers from other plans.

JEVD

Making the complex understandable.

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