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Simplified Employee Pensions (SEPs) and SIMPLE Plans

Setting Up a SEP

Administrative simplicity is one of the primary advantages of simplified employee pensions (SEPs). SEPs are easy to open and require less paperwork than qualified plans. Unlike Keoghs, SEPs require no plan document other than a standardized IRS form (Form 5305-SEP). If you don't adopt an IRS approved prototype plan, you must prepare and adopt a written plan that satisfies the IRS requirements.

Unlike Keoghs, you have until the due date of your income tax return (including extensions) to both establish and contribute to the SEP. Typically, the employees (including you) can choose how their SEP funds are invested.

Where to Set Up a SEP

Your local bank or credit union can open a SEP for you. All that is required is a simple, one-page document (Form 5305-SEP) to be completed by you, the employer. Setup and annual fees, per plan, may apply.

Reporting Requirements

The reporting and disclosure requirements for SEPs are less cumbersome and costly to employers than those for other retirement plans. All that is required is Form 5305-SEP (Simplified Employee Pension-Individual Retirement Accounts Contribution Agreement), a one-page, easy-to-complete form. This serves as the written plan instrument. The form is not filed with the IRS, but it should be kept in the employer's records to support the legal adoption of the arrangement.

IMPORTANT NOTE: Each employee must be given a copy of the completed Form 5305-SEP. Also, each year, a statement must be given to each employee showing any contributions to the employee's SEP.

Disclaimers:

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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