SEP IRA’s for all residents living in Maryland
Maryland Annuity Resource and offers SEP IRA services to self employed residents living in Maryland. We believe that any plan but especially a SEP IRA is the foundation to any investment portfolio. There are many differences amongst all of the Individual Retirement Accounts but we wanted to show you about SEP IRA’s in this section.
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. A SEP does not have the start-up and operating costs of a conventional retirement plan and allows for a contribution of up to 25 percent of each employee’s pay.
How does a Maryland SEP IRA work?
Jed works for the Rambling RV Company. Rambling RV decides to establish a SEP for its employees. Rambling RV has chosen a SEP because the RV industry is cyclical in nature, with good times and down times. In good years, Rambling RV can make larger contributions for its employees and in down times it can reduce the amount. Rambling RV’s contribution rate (whether large or small) must be uniform for all employees. The financial institution that Rambling RV has chosen for its SEP has several investment funds from which to choose. Jed decides to divide the contribution to his SEP-IRA among three of the available funds. Jed, an employee, cannot contribute because SEPs only permit employer contributions.
Pros and Cons:
Who Contributes: Employer contributions only
Contribution Limits: Total contributions to each employee’s SEP-IRA are limited.
Filing Requirements: An employer generally has no filing requirements.
Participant Loans: Not permitted. The assets may not be used as collateral.
In-Service Withdrawals: Yes, but includible in income and subject to a 10% additional tax if under age 59 1/2.
Additional Resources Source IRS
Participants in Salary Reduction Simplified Employee Pension (SARSEP) plans established before 1997 were entitled to elective deferral contributions. For these plans, a participant’s elective deferral contributions are further limited to $17,500 (in 2013 and 2014) or 100% of their compensation, whichever is less. Catch-up contributions are not subject to this limit.