Term of the Day
A Simplified Employee Pension Individual Retirement Account is a variation of the Individual Retirement Account used in the United States. Even more so than the SIMPLE IRA, the SEP-IRA really is "simple." There are no real administration costs if you are self-employed and don't have any employees. If you do have employees, all employees must receive the same benefits under a SEP plan. Since SEP accounts are treated as IRAs, funds can be invested the same way as any other IRA.
Deadline for Establishment and Contributions:
Filing deadline for employer's tax return, including extensions.
The following employees who meet the following conditions:
1) be at least 21 years of age
2) has worked for the employer for at least three of the previous five years, and
3) received at least $450 in compensation for the tax year
SEP-IRA funds are taxed at ordinary income tax rates when qualified withdrawals are taken after age 59.5 (the same rule as for traditional IRAs). Contributions to a SEP plan are deductible: they will lower a taxpayer's income tax liability in the current year.