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Michigan's Insurance Company
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Simplified Employee Pension (SEP) What is a Simplified Employee Pension Plan (SEP)? Basically, a Simplified Employee Pension Plan is a pension plan for employers who wish to give their employees a retirement plan, while giving themselves a tax break and enjoying the benefits of maintaining a less complicated qualified plan. The accumulation vehicle for this plan is an IRA, which is established for each employee. A SEP from Farm Bureau Life Insurance Company of Michigan is a tax-deductible alternative for employers who want to provide themselves and their employees with the benefits of a pension plan without assuming the costly and restrictive fiduciary responsibilities normally associated with pension plans. How is the funding of a pension plan through an individual's IRA accomplished? Employers can contribute up to $46,000 a year or 25% of the employee's compensation (whichever was less) to a SEP-IRA. The amount can be varied each year as long as the percentage remains uniform for all employees and there is no discrimination. Contributions are not required each year. The maximum amount of compensation that can be considered to determine the contribution is $230,000. What employees are eligible to participate? All employees who are 21 years old or older, have performed some service during at least three of the preceding five calendar years, and have earned $500 in the present calendar year are eligible and must participate. Contact your Farm Bureau Insurance agent for more information. Electronic product brochures Monthly E-Newsletters The product information included in the Farm Bureau Insurance of Michigan web site is intended for Michigan residents only, and is neither an offer to sell nor an invitation to purchase any insurance product. |
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