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Exclusive Insurance and Benefit Plans for Business and Education |
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Financial Planning
Estate Planning and Wealth Accumulation | Online Insurance Simplified Employer Pensions
A SEP account is a cross between a 401(K) and an IRA. With a SEP account, the employee opens an IRA account and then the employer deposits money into the account on their behalf. After the money is deposited, it's the employee's money. The employee can treat the account as he would any IRA. The employer gets to deduct the contribution as a wage expense and the contribution never shows up on your W-2 as taxable income. Truly a win - win situation for the employer and employee.
If you are self employed, you would take the SEP contribution as an adjustment to your income on the front page of your IRS 1040 form. An advantage of the SEP is its lack of complex administration and fees.
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