SEP, SIMPLE, 403B, 457 KEOGH,

Question 1

SEP

Answer 1

Employer contributions ONLY
Form 5305-SEP
Easy to set up

25% of Comp $265000 max or $53000
Flexible contributions
100% vested

Sole propritors- 20% of net income(see prior lesson)
looking for easy and inexpensive

Contributions MUST be the same for employees and owners

not age weighted
can be integrated with SSI

Question 2

SEP Requirements

Answer 2

Must cover all employees

• 21 or older (currently, not by end of year)
• worked 3 or more out of last 5 years
• part time counts
• Can exclude those with under $600 compensation
• disadvantage to employer with lots of long term employees

Question 3

SARSep

Answer 3

had to be adopted before 1997 and continued to be grandfathered

25 employees at any tome during the year
50% of eligible employees must participate
$18000
$6000 catch up

Question 4

Simple

Answer 4

employees can make pre-tax elective contributions
$12500 ($10000 indexed to inflation)
$3000 special catch up
No discrimination testing
Deferrals subject to FICA and FUTA

Mandatory employer match
$ for $ 3% employee compensation
can elect lower 1% - in no more than 2 out of 5 years

No deferral- no match

or

option: Non elective deferral 2% for all eligible employees (even if not deferring)

100 or fewer employees
easy to administer
employee salary deduction 
match
5304 or 5305-SIMPLE given to employees not IRS

No other qualified plans allowed

Eligible:
employee earned $5000 any previous 2 years
expected to ear $5000 current year
must notify 60 day election period

Can make on behalf of domestic employee
not in connection with trade or business
not deductible

Fully vested at all times
10% penalty on distributions increased to 25% in first 2 years

Question 5

Simple 401K

Answer 5

exempt from AFP and ACP
exempt from top heavy requirements
very rigid plan design
exempt from creditors
no 1% special match election

Question 6

403B

Answer 6

TDA/TSA
salary reductions subject to FICA and FUTA
501c3
religious
educational
hospitals

$18000
$6000 catch up
$3000 15 yrs same employer…and catch up
415 limit of $53000 applies

annuities or mutual funds

Question 7

457 Plan

Answer 7

Government Units
Government Agencies
non Church TE Entities
State

$18000
$6000 catch up

Special catch up
3 yrs prior to normal retirement age
Not in final yr of employment
double normal limit or
$18000 + amount by which preceding years limit exceeded actual deferral

no coordination with elective deferrals on other plans like 401k..can do both