SEP IRA – Simplified Employee Pension Individual Retirement Account
With retirement at the forefront of every business owner and employee’s mind, finding a good solution to fit the needs of everyone is important. Designed with the needs of self employed business owners and employees of these small companies, a Self Employment Pension Individual Retirement Plan (SEP IRA) offers many benefits for the business owner and employee alike.
SEP IRAs are set up by the employer who, if he decides to offer the plan to employees as well, must offer equal opportunities to each employee. According to IRS guidelines in publication P560, the employee will fill out the paperwork and the employer can then set up the account. Contributions can be made on a periodic basis or sporadically, according to the agreement with the employer. The contributions are 100% tax free and annual limits as of 2011 allow up to $49,000 to be invested.
SEP IRAs work like traditional IRAs in that they must be held until retirement age. At the age of 59 ½ the holder is qualified to withdraw funds without a penalty – he or she simply pays the income tax. If the funds are withdrawn prior to the age of 59 ½, the holder will pay a 10% penalty in addition to the income taxes on the withdrawal amount.
There are many benefits to setting up an SEP IRA. Some of these benefits include:
A SEP IRA can be used for investing in private companies that are planning to go public. Not many IRAs are designed to allow contributors to use their retirement funds as an investment in terms of stock.
Pre-IPO investing is a unique advantage of a SEP IRA. An IPO is an initial public offering and it pertains to buying stock in a company going public. Initial Public Offerings (IPOs) are often a great deal because you can use your retirement contribution to buy shares at a typically lower price as IPOs are offered at lower than subsequent market prices as a way to build up capital.
Contributions are not required annually. Most retirement plans require that an investment is made on a regular basis. If a company stops showing profitability, the owner can simply hold off on contributing to the IRA until business picks up. This gives a business owner the flexibility they need to keep the company assets to weather hard times.
Consolidation is easy. For business owners who have another type of retirement account such as a 401(k) or a profit sharing plan, these can all be rolled over and consolidated into an SEP IRA with ease.
Self directed SEP IRA investors can participate in private placements of pre-IPO companies. Our firm manages the going public process for private companies. While we are not licensed to raise investment capital (and we earn no fees from any financing related activities), we would be happy to explain how the process works and provide you with more information about pre-ipo investing.
SEP retirement account
SEP IRAs are set up by the employer who, if he decides to offer the plan to employees as well, must offer equal opportunities to each employee. According to IRS guidelines in publication P560, the employee will fill out the paperwork and the employer can then set up the account. Contributions can be made on a periodic basis or sporadically, according to the agreement with the employer. The contributions are 100% tax free and annual limits as of 2011 allow up to $49,000 to be invested.
SEP IRAs work like traditional IRAs in that they must be held until retirement age. At the age of 59 ½ the holder is qualified to withdraw funds without a penalty – he or she simply pays the income tax. If the funds are withdrawn prior to the age of 59 ½, the holder will pay a 10% penalty in addition to the income taxes on the withdrawal amount.
There are many benefits to setting up an SEP IRA. Some of these benefits include:
A SEP IRA can be used for investing in private companies that are planning to go public. Not many IRAs are designed to allow contributors to use their retirement funds as an investment in terms of stock.
Pre-IPO investing is a unique advantage of a SEP IRA. An IPO is an initial public offering and it pertains to buying stock in a company going public. Initial Public Offerings (IPOs) are often a great deal because you can use your retirement contribution to buy shares at a typically lower price as IPOs are offered at lower than subsequent market prices as a way to build up capital.
Contributions are not required annually. Most retirement plans require that an investment is made on a regular basis. If a company stops showing profitability, the owner can simply hold off on contributing to the IRA until business picks up. This gives a business owner the flexibility they need to keep the company assets to weather hard times.
Consolidation is easy. For business owners who have another type of retirement account such as a 401(k) or a profit sharing plan, these can all be rolled over and consolidated into an SEP IRA with ease.
Self directed SEP IRA investors can participate in private placements of pre-IPO companies. Our firm manages the going public process for private companies. While we are not licensed to raise investment capital (and we earn no fees from any financing related activities), we would be happy to explain how the process works and provide you with more information about pre-ipo investing.
SEP retirement account
