SEP-IRAs
Simplified Employee Pension Plan
- No government filings
- Contributions only from employer
- For sole proprietors, partnerships, corporations
All contributions for Simplified Employee Pension Plans, or SEPs, are made by the employer. Contributions must or SEPs, are made by the employer. Contributions must be made for everyone, can not exclude an employee. That can be a plus for very small or owner-only business allows you to put aside a lot of money for very little expense or paperwork. Do fact you do not need to file with government.
The maximum contribution can’t exceed the lesser of:
- $57,000 for 2020
- 25% of the employee’s net compensation
For self-employed individuals, IRS defines compensation as your net earnings, minimum $600 for self employment, reduced by one-half of your self-employment tax and by your entire SEP-IRA contribution, up to a compensation limit of $285,000 for 2020
You do not have to contribute every year and does not have to be same amount each year.