In most cases, self-employed individuals and small businesses can establish a SEP plan using the link below.* For answers to questions and assistance in completing the forms, or to discuss your options, call a T. Rowe Price client services representative at 1-800-638-3804. You can also request that a SEP plan kit be mailed to your home or business.
*You can not establish a SEP Plan at T. Rowe Price if you:
- Currently maintain another kind of retirement plan
- Intend to operate your SEP plan on a fiscal year (not calendar year) basis
- Wish to integrate SEP contributions with Social Security
- Have any leased employees
- Are a member of an affiliated service group, controlled group of corporations, or a trade or business under common control
A SEP plan must cover all employees who satisfy the eligibility requirements. Eligible employees cannot choose whether or not they will participate in the plan.
There is an annual $10 administrative fee for each T. Rowe Price SEP-IRA mutual fund account. This fee is waived for mutual fund accounts with balances over $5,000, for individuals with over $50,000, and for households with over $100,000 invested at
The age and service requirements that you choose, within IRS guidelines, determine which employees can participate. You can require that employees reach age 21 (or a younger age) and that they work for you for three (or fewer) years before joining the plan. You may also choose to exclude union employees covered by a collective bargaining agreement (if retirement benefits were the subject of good faith bargaining), certain nonresident aliens, and any employee whose total annual compensation is less than $550 for 2009 ($500 for 2008.) For example, you can choose to let all employees participate by setting a minimum age and service requirement.
No. You are not required to make a contribution every year. Each year you can choose whether to contribute and at what rate. If you do make contributions to employee SEP-IRAs under the SEP plan, you must contribute an amount equal to the same percentage of compensation for all eligible employees, including yourself.
Contributions can be made up to the lesser of 25% of compensation or $49,000 in 2009 ($46,000 in 2008). The compensation limit is $245,000 for 2009 ($230,000 for 2008).
For employees, compensation is the income reported on IRS Form W-2. For self-employed owners, compensation is defined as "earned income." Annual compensation of more than $245,000 in 2009 ($230,000 in 2008) cannot be taken into consideration for determining contributions.
Yes. SEP-IRA accounts can include:
- Employer contributions,
- Traditional IRA contributions (up to applicable limits), and
- Contributions transferred or rolled over from another Traditional IRA or SEP-IRA or rolled over from a qualified plan.
Employer contributions for any calendar year can be made anytime up until the employer's tax filing deadline (including extensions) for that year.
Assets can be withdrawn at any time. However, there is a 10% IRS penalty if you make withdrawals before age 59½ unless certain exceptions apply.
The SEP plan gives you a choice of more than 70 T. Rowe Price stock, bond, and money market mutual funds. For more information about any T. Rowe Price fund, please call 1-800-638-3804 or download a prospectus.
No. Generally, you are not required to file annual returns such as IRS Forms 5500 or 5500-EZ. You are required to report participation in a SEP plan on participants' Form W-2.
SEP contributions are generally tax-deductible as a business expense. Your employees do not pay income taxes on contributions or earnings until assets are withdrawn from their SEP-IRAs.
There is a 10% IRS penalty if withdrawals are made before age 59½ unless certain exceptions apply.
The IRS requires that you provide certain information to all eligible employees, including a completed Form 5305-SEP and a yearly statement of all employer contributions. Refer to IRS Form 5305-SEP for complete information.
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