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Resources for the self-employed

2015 Retirement Plan Resources for Business Owners
and the Self-Employed

         
  SEP SIMPLE Individual 401(k)
Eligibility

Employer: Be either a sole proprietor, business owner, in a partnership, or earn income by providing service while self-employed.  In addition, must:

 

Employer: Generally, have 100 or fewer employees who earned at least $5,000 in the preceding year and does not maintain another retirement plan.

Any business with no employees other than your spouse or other owners.


 

Employee

  • Have reached age 21.
  • Have worked for the employer in at least 3 of the last 5 years.
  •      
  • Have received at least $600 in compensation.

Employee

  • Have worked for the employer for at least 2 years.
  • Reasonably expected to receive $5,000 or more in compensation for the year.

Employee

  • Have reached age 21.
  • Have worked for the business for at least 1 year with 1000 hours.
Tax Benefits

Employer: Tax deductible contributions up to 25% of compensation

Employee: Tax deferred growth on contributions.

Employer: Tax deductible contributions.

Employee: Tax deferment of wages and tax deferred growth on contributions.

Employer: Tax deductible contributions

Employee: Tax deferment of wages and tax deferred growth on contributions.

Establishing a Plan

Employer's tax return due date plus extensions.

For existing businesses Oct. 1st of the calendar year.

For new businesses, after Oct. 1st as soon as administratively feasible.

Employer Document must be signed by December 31st for a calendar year plan.
Responsibilities

Employer: Must establish plan and contribute by their tax return due date plus extensions.

Employee: Must establish a Traditional or SEP IRA.

Employer: Must sign the establishment documents by Oct. 1st and provide annual notices 60 days prior to the following plan year.

Employee: Must establish a SIMPLE IRA.

Employer: Must establish the plan and file an IRS Form 5500 once the plan balance reaches $250,000.

Contributions

Employer: Contributions can vary between the lesser of 0-25% of compensation of $53,000 per participant.

Employee: Each must receive the same percentage.

Employer: Mandatory 3% match, or 2% of up to $12,500 ($15,500 if age 50 or older) per year.

Employee: Up to 100% of compensation, up to $12,500 ($15,500 if age 50 or older) per year.

Employer: Smaller of 25% of compensation of $53,000. The max. compensation amount is $265,000.

Employee: Deferral maximum of $18,000 plus an additional $6,000 for individuals age 50 and older.

Required Minimum Distributions
(RMDs)

Begin at age 70 1/2

Begin at age 70 1/2

Begin at age 70 1/2


The Entrust Group does not offer investment, tax, financial or legal advice to clients. Individuals who believe they need advice should consult with qualified professional(s) licensed in that area. This section of our website is devoted to providing clients and potential client with educational information. It is in no way intended as tax advice.