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SEP IRA plan

A SEP IRA Plan could work for your Business.

Simplified Employee Pension (SEP) IRA plans are a way to help your employees get a head start on retirement savings. Eligible employees establish SEP IRA plans, to which tax-deductible contributions are made by the employer. A SEP IRA is a valuable resource that can help you with recruiting and retaining employees.

 

  • Sole proprietorships, partnerships, limited liability companies (LLCs), or incorporated businesses, including subchapter S corporations, can establish a SEP IRA plan.
  • All eligible employees must be allowed to participate.
  • All plan contributions are 100% vested immediately.
  • The deadline to establish a SEP IRA is the business' tax-filing deadline, including any extensions.
  • Any investment earnings grow tax-deferred until withdrawn.
  • Generally, a 10% tax penalty on distributions applies to participants under age 59½. Participants will have to pay federal income tax on the distributions.

  • Any employee who is at least 21 years old and has performed any service for the employer in up to 3 of the immediately preceding 5 years.
  • Union employees and non-resident aliens who have no U.S. source of income may generally be excluded from coverage.
  • Less restrictive eligibility requirements can be established.

  • Annual contributions are not required.
  • The contribution percentage can vary each year, from 0 to 25% of compensation, up to a maximum of $69,000 in 2024 per participant for each year. The same percentage of compensation generally must be contributed for all eligible employees, including the owner-employee.
  • Employer contributions are tax deductible for the employer – up to 25% of all participants' compensation.
  • There are no annual reports to file with the IRS.

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Disclosures

Neither State Farm® nor its agents provide tax or legal advice.

Securities are not FDIC insured, are not bank guaranteed and are subject to investment risk, including possible loss of principal.

Securities distributed by State Farm® VP Management Corp.

AP2023/12/1269