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Do the Right Thing – Follow the IRS Rules for SEP and SIMPLE IRAs

high5_blogWell done! When you set up your SEP or SIMPLE IRAs, you did the right thing to help your employees save for their retirement. 

Now, you just have to make sure you’re doing the right thing by complying with the IRS SIMPLE and SEP rules. Fortunately, the IRS rules are straightforward.


Employers must:

  • Give all eligible employees the opportunity to participate in the plan. You defined the eligibility rules when you established the plan. For example, you may have decided that employees become eligible after they’ve worked for you a certain number of years. It’s your responsibility to make sure they understand how the plan works and make an election to participate or decline.
  • Contribute the amount you agreed to make when you established the plan.   
    • For a SEP plan, your contributions can be the smaller of $53,000 or 25 percent of each participant’s compensation. You get to decide on an annual basis what your contribution will be.
    • For a SIMPLE plan, the employer contribution is either a dollar-for-dollar match on employee contributions, up to 3 percent of compensation or a fixed, non-elective contribution of 2 percent of the participant’s compensation.
  • Notify employees of any changes made to the plan. For example, you may change the employer contribution from the non-elective contribution to the match.  In this case, you need to let employees know about this change.

These retirement plans for small business owners were designed to be easy to set up and administer. To learn more about SEP and SIMPLE retirement plans, download The Entrust Group’s report specifically for small business owners who are interested in the benefits and tax advantages of a self-directed retirement plan.  


Tax-advantaged retirement plans for small business owners

Self-Directed IRAs:
The Basics Guide

Learn about your investment options, Self-Directed IRA rules, and much more!

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