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Simplified Employee Pensions (SEPs) and SIMPLE Plans

Are You Eligible?

Only an employer can establish a SEP arrangement. In order to sponsor a SEP, you can either be in business by yourself or have employees. If you have eligible employees, you must fund the SEP on their behalf; i.e., you must make contributions to the SEP plan for your eligible employees. You, as the employer, are also responsible for establishing and maintaining the plan.

The participation requirements for a SEP are generally broader than those for Keogh plans. An eligible employee for a SEP is one who meets these conditions:

  • Is at least 21 years old
  • Has performed service for you in at least three of the immediately preceding five years
  • Receives a minimum amount of compensation set annually ($600 in 2020 and 2019) by the IRS

IMPORTANT NOTE: Because of the less restrictive participation rules (see above), SEPs are typically less popular for employers than other retirement plans.

Supercharging Your IRA

A SEP is better than an IRA because an IRA allows you to put away only up to $6,000 in 2020($6,000 in 2019). SEPs are IRAs that an employer sets up for its employees as part of a retirement plan. Like a qualified plan, SEPs are subject to overall contribution limitations (similar to a Keogh plan).


Not a Deposit.
Not FDIC-Insured.
Not Insured by any Government Agency.
Not Guaranteed by the Bank.
May go Down in Value.

Investment and insurance products and services are offered through INFINEX INVESTMENTS, INC. Member FINRA and SIPC. Infinex and BancorpSouth Bank are not affiliated. Products and services made available through Infinex are not insured by the FDIC or any other agency of the United States and are not deposits or obligations of nor guaranteed or insured by any bank or bank affiliate. These products are subject to investment risk, including the possible loss of value.

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