Simplified Employee Pension (SEP) plans can provide a significant source of income at retirement by allowing employers to set aside money in retirement accounts for themselves and their employees.
Under a SEP, an employer contributes directly to traditional individual retirement accounts (SEP-IRAs) for all employees (including themselves). A SEP is easier to set up and has lower operating costs than a conventional retirement plan and allows for a contribution of up to 25 percent of each employee’s pay.
Advantages of a SEP:
- Contributions to a SEP are tax deductible and your business pays no taxes on the earnings on the investments.
- You are not locked into making contributions every year. In fact, you decide each year whether, and how much, to contribute to your employees’ SEP-IRAs.
- Generally, you do not have to file any documents with the government.
- Sole proprietors, partnerships, and corporations, including S corporations, can set up SEPs.
- You may be eligible for a tax credit of up to $500 per year for each of the first 3 years for the cost of starting the plan.
- Administrative costs are low.
Please contact the office of Don Fitch Accountancy at (760)567-3110 or Email Don.Fitch@CPA.com if you have any questions or would like additional information.
DON FITCH, CPA
74478 Highway 111 #3
Palm Desert, CA 92260
Toll Free: (877)CPA-Help or (877)272-4357
P.S. My firm is based upon referrals. Please feel free to refer my firm to anyone you know that is looking for a new CPA and/or tax preparer. Thank you in advance.