Simplified Employee Pensions (SEPs) and SIMPLE Plans

Are You Eligible?

Only an employer can establish a SEP arrangement. In order to sponsor a SEP, you can either be in business by yourself or have employees. If you have eligible employees, you must fund the SEP on their behalf; i.e., you must make contributions to the SEP plan for your eligible employees. You, as the employer, are also responsible for establishing and maintaining the plan.

The participation requirements for a SEP are generally broader than those for Keogh plans. An eligible employee for a SEP is one who meets these conditions:

  • Is at least 21 years old
  • Has performed service for you in at least three of the immediately preceding five years
  • Receives a minimum amount of compensation set annually ($600 in 2019 and 2018) by the IRS

IMPORTANT NOTE: Because of the less restrictive participation rules (see above), SEPs are typically less popular for employers than other retirement plans.

Supercharging Your IRA

A SEP is better than an IRA because an IRA allows you to put away only up to $6,000 in 2019 ($5,500 in 2018). SEPs are IRAs that an employer sets up for its employees as part of a retirement plan. Like a qualified plan, SEPs are subject to overall contribution limitations (similar to a Keogh plan).

Share Article:
Add to GooglePlus

Securities and Investment Advisory Services are offered through LPL Financial, a Registered Investment Advisor, member FINRA/SIPC. Insurance products are offered through LPL Financial or its licensed affiliates. Heartland Planning Associates is a trade name of Heartland Bank. Heartland Bank and Heartland Planning Associates are not a registered broker/dealers and are not affiliated with LPL Financial.  The investment products sold through LPL Financial are not insured Heartland Bank deposits and are not FDIC insured.  These products are not obligations of Heartland Bank and are not endorsed, recommended or guaranteed by Heartland Bank or any other government agency. The value of the investment may fluctuate, the return on the investment is not guaranteed, and loss of principal is possible.  The LPL Financial representatives associated with this website may discuss and/or transact securities business only with residents of the following state: Ohio. Check the background of investment professionals associated with this site on FINRA's BrokerCheck.

Not Insured by FDIC or Any Other
Government Agency
Not Bank
Not Bank Deposits or
May Lose