The Basics: A Simple Plan provides an employer with a simplified method of establishing a retirement plan into which employees can direct their own pre-tax dollars. Participating employees agree to have their salary reduced (or to forego receipt of a bonus), and the employer contributes those funds to an IRA for the employee instead of into his or her paycheck.
The employee's salary deferrals are made directly to SEP-IRAs set up for each employee with a bank, insurance company or other qualified financial institution.
Contributions are not taxed currently to the employee, and earnings accumulate income tax-defeff ed.
Advantages to Employer
Advantages to Employees
Disadvantages to Employer
Disadvantages to Employees
This document was last modified on July 27, 1999
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