News Archive

Why TPAs Shouldn't Ignore SEP-IRAs -- But Also Shouldn't Stop There

"As a gateway, SEP-IRAs make sense. They're the training wheels of employer-sponsored retirement plans. But the problem is too many employers, and too many plan providers -- never take the training wheels off.... If your client has more than one employee, or plans to hire more, the SEP-IRA is a temporary fix at best, and a costly mistake at worst."  MORE >>

Text of IRS Publication 560: Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans), for Use in Preparing 2024 Returns (PDF)

48 pages. "What's New: [1] Compensation ... [and] catch-up contribution limits for 2024 and 2025 ... [2] Plans established after the end of tax year.... [3] Increased small employer pension plan startup cost credit.... [4] Employer contributions credit.... [5] Small employer military spouse participation credit.... [6] Designated Roth nonelective contributions and designated Roth matching contributions.... [7] Matching contributions on account of qualified student loan payments.... [8] Starter 401(k) deferral-only arrangement.... [9] Additional nonelective contributions under a SIMPLE IRA plan.... [10] Midyear replacement of SIMPLE IRA plan with safe harbor 401(k) plan.... [11] Roth IRAs under a SEP arrangement and Roth SIMPLE IRAs under a SIMPLE IRA plan.... [12] Pension-Linked Emergency Savings Accounts. "  MORE >>

Draft of IRS Publication 560: Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans), for Use in Preparing 2024 Returns (PDF)

49 pages; Mar. 13, 2025. "What's New: [1] Compensation ... [and] catch-up contribution limits for 2024 and 2025 ... [2] Required minimum distributions (RMDs).... [3] Plans established after end of tax year.... [4] Increased small employer pension plan startup cost credit.... [5] Employer contributions credit.... [6] Small employer military spouse participation credit.... [7] Designated Roth nonelective contributions and designated Roth matching contributions.... [8] Matching contributions on account of qualified student loan payments.... [9] Starter 401(k) deferral-only arrangement.... [10] Additional nonelective contributions under a SIMPLE IRA plan.... [11] Midyear replacement of SIMPLE IRA plan with safe harbor 401(k) plan.... [12] Roth IRAs under a SEP arrangement and Roth SIMPLE IRAs under a SIMPLE IRA plan.... [13] Pension-Linked Emergency Savings Accounts. "  MORE >>

Small Business Retirement Plan Options, 2025 (PDF)

This chart compares the 4 common types of plan designs often utilized by small employers.  MORE >>

Solo 401(k) vs. SEP IRA: A Comprehensive Guide for Freelancers and Entrepreneurs

"Choosing the right retirement plan is crucial for securing financial stability in your later years, especially for freelancers and solo entrepreneurs who don't have access to employer-sponsored plans.... Two popular choices for self-employed individuals are Solo 401(k) plans and SEP IRAs.... This guide will help you compare these plans to determine which one is the best fit for you."  MORE >>

Draft of 2024 IRS Form 5498: IRA Contribution Information (PDF)

"The information on Form 5498 is submitted to the IRS by the trustee or issuer of your individual retirement arrangement (IRA) to report contributions, including any catch-up contributions, rollovers, repayments, required minimum distributions (RMDs), and the fair market value (FMV) of the account."  MORE >>

Text of IRS Publication 560: Retirement Plans for Small Business (SEP, Simple, and Qualified Plans), for Use in Preparing 2023 Returns (PDF)

44 pages; Jul. 5, 2024. "What's New: [1] Compensation ... Elective deferral ... Defined contribution ... Defined benefit ... SIMPLE plan salary reduction contribution ... [and] Catch-up contribution limits for 2023 and 2024 ... [2] Required minimum distributions (RMDs).... [3] Plans established after end of taxable year.... [4] Increased small employer pension plan startup cost credit.... [5] Employer contributions credit.... [6] Small employer military spouse participation credit.... [7] Designated Roth nonelective contributions and designated Roth matching contributions."

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Text of IRS Publication 560: Retirement Plans for Small Business (SEP, Simple, and Qualified Plans), for Use in Preparing 2023 Returns (PDF)

44 pages; Mar. 7, 2024. "What's New: [1] Compensation ... Elective deferral ... Defined contribution ... Defined benefit ... SIMPLE plan salary reduction contribution ... [and] Catch-up contribution limits for 2023 and 2024 ... [2] Required minimum distributions (RMDs).... [3] Plans established after end of taxable year.... [4] Increased small employer pension plan startup cost credit.... [5] Employer contributions credit.... [6] Small employer military spouse participation credit.... [7] Designated Roth nonelective contributions and designated Roth matching contributions."  MORE >>

Text of IRS Comment Request: Salary Reduction SEP/IRA Contribution Agreement

"[T]he IRS is soliciting comments concerning the burden associated with the salary reduction simplified employee pension-individual retirement accounts contribution agreement.... Form 5305A-SEP is used by an employer to make an agreement to provide benefits to all employees under a Simplified Employee Pension (SEP) described in Internal Revenue Code section 408(k). This form is not to be filed with the IRS, but is to be retained in the employer's records as proof of establishing a SEP and justifying a deduction for contributions made to the SEP."

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SEP-IRA vs. Profit-Sharing Plan: Considerations for Small Businesses

"[1] Which employees will you cover? ... [2] Contribution amount ... [3] Flexibility and commitment ... [4] Potential complexity ... [5] Control and responsibility."

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Draft of 2023 IRS Publication 560: Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) (PDF)

44 pages; Jan. 31, 2024. "What's New: [1] Compensation limits for 2023 and 2024.... [2] Elective deferral limits for 2023 and 2024.... [3] Defined contribution limits for 2023 and 2024.... [4] Defined benefit limits for 2023 and 2024.... [5] SIMPLE plan salary reduction contribution limits for 2023 and 2024.... [6] Catch-up contribution limits for 2023 and 2024 ... [7] Required minimum distributions (RMDs)."

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Diving Into SECURE 2.0: Changes for Small Employer Retirement Plans

"[This post focuses] specifically on SECURE 2.0 changes to small employer plans, including SIMPLE IRA Plans and SEPs.... The chart [in this article] is intended to be used as a reference for describing many of the Small Plan changes relative to current law, the type of plans affected, whether the change is mandatory or optional, and the effective date of the change."  MORE >>

SECURE 2.0 Creates New Opportunities for IRAs, SEPs and SIMPLE IRAS

"Many of the general changes ... apply to individual retirement accounts (IRAs) as well as to other types of retirement plans. Other new options apply to SEP-IRAs and SIMPLE IRAs ... [including] the ability to match participant loan repayments under SIMPLE IRAs and the ability to establish a SEP for domestic employees. Additional changes that enhance the benefits of participation and permit increased contributions are specific to IRAs, SEP-IRAs and SIMPLE IRAs."  MORE >>

Text of 2023 IRS Form 5498: IRA Contribution Information (PDF)

"The information on Form 5498 is submitted to the IRS by the trustee or issuer of your individual retirement arrangement (IRA) to report contributions, including any catch-up contributions, required minimum distributions (RMDs), and the fair market value (FMV) of the account."

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The Slippery Slope of SEP and SIMPLE Notification Duties

"As the June 30, 2022 CalSavers deadline bears down on employers with five or more California employees, many small employers may be giving thought to adopting a simplified retirement plan, whether a SEP or SIMPLE IRA.... [E]ach of these types of plans imposes participation notification duties that employers often overlook, and noncompliance can put the tax-sanctioned status of the whole arrangement at risk."

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IRS Temporarily Halts Prototype IRA Opinion Letter Program

"This temporary suspension comes as no surprise as the [SECURE Act] made significant changes to IRAs, and questions regarding some of the SECURE Act's more complex changes still remain.... The IRS intends to issue updated model forms and LRMs as well as a new revenue procedure for requesting an IRS opinion letter on prototype IRAs."  MORE >>

Text of IRS Announcement 2022-06: Temporary Suspension of IRS Prototype IRA Opinion Letter Program (PDF)

"This announcement provides that, effective March 14, 2022, and until further notice, the [IRS] will not accept applications for opinion letters on prototype IRAs (traditional, Roth and SIMPLE IRAs), SEPs (including salary reduction SEPs (SARSEPs)), and SIMPLE IRA plans. This announcement also provides that, pending issuance of future guidance [1] adopters of prototype IRAs, SEPs, and SIMPLE IRA plans may rely on a previously received favorable opinion letter, and [2] taxpayers may use existing model forms to maintain current plans and accounts or establish new plans and accounts."

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IRS VCP Submission Kit for Use When Plan Sponsor Was Not Eligible to Sponsor a SIMPLE IRA Plan

"Plan sponsors may use this Voluntary Correction Program (VCP) Submission Kit if they: [1] Aren't eligible to sponsor a SIMPLE IRA Plan, because they have too many employees, or [2] Can't sponsor a SIMPLE IRA Plan, because they maintain another type of retirement plan.... Receiving IRS approval of this submission kit, however, doesn't correct other failures in your plan, like the failure to: [1] Limit contributions made to the SIMPLE IRA plan in accordance with IRC Section 408(p); [2] Update your SIMPLE IRA plan document for current law changes; [3] Operate the SIMPLE IRA plan according to its written terms; [4] Admit all eligible employees."

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Is a Solo 401(k) or a SEP-IRA Better for a Small Business with No Employees?

"Depending on the time of year you ask this question, you may find you've eliminated one of the options right off the bat.... Is there a chance you might want to wait until after the tax year to fund the plan? ... Are you looking for the simplest and easiest option? ... Do you want a Roth Option? ... Do you want to make the highest possible contribution? ... Do you earn more than $280,000? ... Do you want to contribute your entire earnings? ... Are you age 50 or above and wish to take advantage of a catch-up provision? ... Do you think you might need to take a loan from your retirement savings? ... Do you expect to hire employees in the future?"  MORE >>

Text of 2018 IRS Publication 560: Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) (PDF)

28 pages; Jan. 24, 2019. "What's New: [1] Compensation limits for 2018 and 2019.... [2] Elective deferral limits for 2018 and 2019.... [3] Defined contribution limits for 2018 and 2019.... [4] Defined benefit limits for 2018 and 2019.... [5] SIMPLE plan salary reduction contribution limit for 2018 and 2019.... [6] Catch-up contribution limits for 2018 and 2019 ... [7] Changes to the hardship distribution rules for section 401(k) plans.... [8] Tax relief for victims of Hurricanes Michael and Florence."

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IRS Publication 4286: SARSEP Checklist (PDF)

Revised Aug. 2018. "Every year it's important to review the requirements for operating your Salary Reduction Simplified Employee Pension (SARSEP) plan. Use this checklist to help you keep your plan in compliance with many important rules. For additional information (including examples) on how to find, fix and avoid each mistake click on [a link in the text of this Checklist].' "

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Text of IRS Publication 4285: SEP Checklist (PDF)

Rev. Aug. 2018. "Every year it's important that you review the requirements for operating your Simplified Employee Pension (SEP) plan. Use this checklist to help you keep your plan in compliance with many of the important rules."

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Text of 2018 IRS Form 5498: IRA Contribution Information (PDF)

"The information on Form 5498 is submitted to the IRS by the trustee or issuer of your individual retirement arrangement (IRA) to report contributions, including any catch-up contributions, required minimum distributions (RMDs), and the fair market value (FMV) of the account."

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IRS Clarifies Federal Tax Reporting and Withholding for Escheated Funds from IRAs

"The IRA owner's ability to reclaim these monies from the state unclaimed property fund is noted in the ruling but does not figure in the analysis. For Form 1099-R reporting, the ruling does not prescribe a unique reporting code or other designation that the IRA has been escheated to the state. The ruling by its terms is inapplicable to simplified employee pensions (SEPs), SIMPLE-IRAs and deemed IRAs."  MORE >>

List of IRS-Approved Nonbank Trustees as of April 1, 2018 (PDF)

An entity that is not a bank (or an insurance company in the case of Archer Medical Savings Accounts and health savings accounts) can request to be a nonbank trustee/custodian by applying in writing and demonstrating that certain requirements will be met in order to handle any of the following fiduciary accounts: [1] Archer Medical Savings Account (MSA); [2] Health Savings Account; [3] Qualified Retirement Plan Custodial Account; [4] 403(b)(7) Custodial Account; [5] Individual Retirement Arrangement (IRA); [6] Roth IRA; [7] Deferred Compensation Plan of State & Local Government and Tax Exempt Organizations; [8] Custodial Accounts Coverdell Education Savings Account. [More information is on an IRS web page.]  MORE >>