For years, retirement plan options for small business owners were limited. But not now.
Strategy: Compare the Simplified Employee Pensions (SEP) with the Savings Incentive Match Plan for Employees (SIMPLE). Here’s a review of the key aspects of the two plans.
The skinny on SEPs
Eligibility: With a SEP, contributions must be made for all employees age 21 or older who have worked for your company full time three out of the previous five years (absent any other union agreement). Part-time employees, or those who worked for the company only part of the year, must be covered under the plan if they earn more than $550 in 2013.
Contribution limits: For 2013, the maximum deductible contribution limit per participant is the lesser of (a) 25% of compensation or (b) $51,000. The maximum amount of compensation that may be taken into account for this purpose in 2013 is $255,000. But contributions are discretionary, so you can boost th...(register to read more)