Music. Hello, I'm Michael Ruger. I'm a certified financial planner and a managing partner at Greenbush Financial Group. Today, I'll be talking to you about SEP IRAs. SEP IRAs are a type of employer-sponsored retirement plan. They are one of the most common plans for sole proprietors and small employers because they are very easy to set up and inexpensive to sponsor. SEP stands for Simplified Employer Pension. The great thing about these plans is they can be established after 12/31, which means they can be set up and funded even after the tax filing deadline. So if you find yourself with a large tax liability, a SEP IRA can be a useful tool to take advantage of the tax benefits. The way SEP IRAs work is that the contribution is a percentage of your net earned income. The maximum limit you can contribute is twenty percent of your net earned income. However, you can choose to contribute less, such as five or ten percent. However, if you start hiring employees or have eligible employees, you need to be cautious. SEP IRAs are 100 percent employer funded, unlike 401(k)s where both employees and employers contribute. So if you contribute twenty percent for yourself, you must also contribute twenty percent for all eligible employees. This can quickly become expensive, leading employers to consider other types of retirement plans for their company. Many employers mistakenly believe that only full-time employees are eligible for SEP IRAs, overlooking part-time employees. In reality, all they need to do is earn $500 in a given year and have one year of service to be eligible. Some employees may have already met this requirement after working for you for two or three years. The good news is that you have the option to exclude employees for the...
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Irs 5304-sep Form: What You Should Know
If you allow plan participants to choose the individual accounts, only their SIMPLE IRA fund accounts are included in the IRS report to reduce penalties and interest under the Internal Revenue Code. Form 5304 (Rev. 12-2004) — IRS To obtain a Copy of a SIMPLE IRA Plans Report — Form 5304-SIMPLE — The IRS (for individuals with retirement accounts under which contributions are made and which are maintained in a tax-exempt organization) The IRS provides a simplified process for obtaining the report: go to IRS.gov/SIMPLEIRRR, e-mail Form 5304-SIMPLE IRR, or mail Form 5304-SIMPLE to you: SIMPLE IRA Plan Disclosure Statement — IRS If you don't have retirement account(s) under which contributions are made to a SIMPLE IRA plan and the SIMPLE IRA-linked plan requires participants in the plan to designate a financial institution to receive the SEP funds, you must first obtain the information from each participant's plan. Form 5825 (Rev. March 10, 2013) — Internal Revenue Service Use Form 5825 to amend the SIMPLE plan. In addition to other changes, include these additions: You are giving the plan a new name. For more information on how to use this form, see the instructions for Form 5825. You are changing the form to match the form numbers and dates of the original program. To get this Form 5825, fill out Form 5825-SIMPLE. You may need to file it on or before the due date of your return if you: Have a SIMPLE IRA Form 5304 (Rev. 12-2004) — IRS — IRS forms 5304-SIMPLE, 5304(R)Simplify, 5305.SIMPLE, 5304(S)Simplify, and 5306.SIMPLE include SIMPLE IRA accounts and SIMPLE IRA custodians. Form 5304(R) — SIMPLE IRA Plan When you have a SIMPLE IRA, you must have the plan document available when you contact your custodian. You can check the status of your SIMPLE IRA via the following telephone numbers:. The SIMPLE IRA is not yet in existence; please call the number above and speak with a program representative. The SIMPLE IRA is a legal contract which requires that you take part in the operation of the plan.
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