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Business Retirement Plans |
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Simplified Employee Pension (SEP) IRA |
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| Employer Characteristics | All taxable business, government entities & tax-exempt organizations |
| Who Must Be Covered | Any employee who has worked for 3 out of the past 5 years & is age 21 or older. Can exclude certain employees. |
| Maximum Allocation 2010 | Generally, 25% of employee’s pay or $49,000, whichever is less. |
| Maximum Annual Employee Deferral | No employee contributions are allowed. |
| Required Employer Contributions | None; however, a minimum allocation may be required if a contribution is made & plan is top-heavy. (A plan is top-heavy if on the determination date, the total value of the accounts of all key employees is greater than 60% of the total value of the accounts of all employees.) |
| Vesting | Immediate 100% vesting. |
| Top-Heavy Testing Required | Yes |
| Who Controls Distributions | Employee |
| Advantage of this type of plan |
-Minimal paperwork & expense -Minimal tax filing -No requirement to make ongoing contributions |