SEP IRA Quick Reference Guide- 2010

Last Updated March 2, 2011

SEP IRA Quick Reference Guide- 2010

SEP IRA Features and Benefits
Eligible Employer	Age Requirement	Service and compensation requirement	Salary deferral allowed	Maximum contributions allowed for employee
Any employer. Employers who use the services of leased employees or maintain any other retirement plan cannot use the form 5305-SEP, but may use a prototype or individually designed SEP	Can exclude employees under age 21	Must include employees who worked at least 3 of the 5 preceding years. A year of service is any work performed during the year, however short a period. Can exclude employees who earn less than $550.	No	Lesser of 25% of employee’s compensation or $49,000 for 2010

Deductible contribution limit	Limitation on Compensation	Vesting of Contributions	Deadline to Establish Plan	Deadline for making contributions
25% of eligible compensation of all eligible employees	For 2010, the compensation cap is $245,000	100% immediate vesting	Employer’s tax filing deadline, including extensions	Employers tax filing deadline, including extensions

Nondiscrimination testing	5500 filing	Complexity	Administrative cost	Notable notes
N/A	N/A	Low	Low	Gives business that has not established a profit pattern or one that experiences fluctuation in profits, flexibility due to discretionary contribution feature
*Ideally suited for …*
Employers who are looking for a plan that is easy/inexpensive to set up and administer and has a discretionary feature for contributions.