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SEP-IRA
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| A SEP or Simplified Employee Pension is a Plan that allows a self employed person to make contributions toward their own and their employees' retirement plans without becoming involved in more complex plans. The contributions are made to a traditional IRA of each participant of the plan, therefore the term SEP IRA. |
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| Each participant under the SEP may establish their own IRA at the institution of their choice. As the underlying account is an IRA, any covered employee may have a self-directed IRA as their SEP-IRA. This is in addition to any other IRAs one has. |
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Compared to other plans, the annual maximum on SEP contributions is high: $40,000 or 25% of earned income, whichever is less. You may take a tax deduction of 25% of compensation (20% if you're self-employed) paid during the year to the participants under the plan.
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So if you have high earnings and want to build a nest egg quickly or shelter income from taxes, a SEP could be exactly what you're looking for. If contributions are made, they must be made in accordance with set rules, which may be different for each situation. Your Tax Accountant should assist you in ensuring compliance.
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| Roth IRAs are not eligible for SEPs, however IRAs to which SEP contributions have been made may be converted to Roth IRAs. |
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ALL SECURITIES OFFERED THROUGH THE INVESTMENT CENTER, INC., Bridgewater, NJ Member NASD - SIPC
- A REGISTERED INVESTMENT ADVISOR LICENSED IN THE FOLLOWING STATES: CA, CO,
CT, FL, GA, LA, MD, MI, NJ, NM, NY, PA, TX, VA
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