Eligibility

July 27th, 2005

SEP IRA Eligibility

Must everyone eligible for the SEP IRA Plan participate?

Yes.

If the employer fails to make a Contribution for every eligible employee, then none of the SEP IRA contributions made to any employee will qualify for favorable tax treatment.

Therefore, should an employee refuse or for any reason be unable to establish a SEP IRA to receive the employer’s contributions, the employer can establish a SEP IRA on the behalf of the employee to receive any SEP contributions. The employer may not, however, designate a beneficiary to receive the SEP IRA following the employee’s death.

What are the SEP IRA fees or fees to establish a SEP IRA Plan?

Each SEP IRA account is assessed an annual account maintenance fee of approximately $15 – $50 when the account is opened and every year thereafter. This fee may be waived for large accounts depending on the Financial Institution.

There is also a termination fee of approximately $75 when the account is closed, unless the distribution is due to retirement (age 59 �), total disability or death.

Ultimately, it is the employee’s responsibility to pay his or her maintenance and termination fees for his or her own account.

There is no fee to the employer for using the SEP IRA Employer Agreement.

Must the employer file IRS Form 5500 on an annual basis for a SEP IRA Plan?

No.

There is no annual IRS Form 5500 filing requirement for a SEP IRA.

Where can I get more information about SEP IRA Plans?

IRS Publication 560, Retirement Plans for Small Business, and IRS Publication 590 provides additional information on SEP IRA Plans.

SEP IRA