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These plans are available for companies with fewer than
26 eligible employees.
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You can have eligibility requirements of age 21 and 0 to
3 years of employment with a minimal earnings level each year.
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For the SAR-SEP plans there must be 50% participation in
the plan.
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The employer can make a contribution of 0 to 25% of all
eligible employees compensation.
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Generally, everyone receives the same percentage of his
or her compensation. However, you may integrate the allocation formula
using social security integration.
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An IRA is set up for each eligible employee under the
SEP.
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Profits are not necessary for making this contribution.
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Employee Salary Deferral Contributions are only allowed
in plans already in existence prior to 1/1/97.
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Employer Matching Contributions are not available.
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These Plans are required to be on a calendar year basis.
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No loan provisions or hardship provisions are allowed.
However, in-service withdrawals are allowed since the funding vehicles
are IRAs.
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The plan may require a minimum contribution level of 3%
if it is Top Heavy and the Key employees receive at least a 3%
contribution.
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100% vesting immediate is required.
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No Annual Tax Filings are required. However, it is
important to update the plan for legislative changes and requirements.
