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SEP IRAs

If you’re a small business owner or self employed, a Simplified Employee Pension Plan (SEP) may help you get the tax-deferred benefit you need to grow your retirement savings.

  • Tax-deferred growth
  • Tax-deductible contributions
  • No complicated governmental filing requirements

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Eligibility

Individuals who are eligible to establish a SEP and have eligible employees establish SEP IRAs include:

  • Sole proprietors
  • Business owners in a partnership
  • Those earning self-employment income by providing a service

Contributions

SEP contributions must be made by the employer.

  • Contributions can vary each year (between 0%–25% of compensation up to $51,000 for 2013).
  • Each eligible employee must receive the same percentage.

Employers may contribute until the business tax filing deadline for the year, including extensions.

Catch-up contributions are not allowed with the exception of IRAs that hold the SEP contributions if the SEP IRA documents allow.

Taxes

Contributions are tax deferred to employees and tax deductible as a business expense.

  • Savings grow tax deferred.
  • Income taxes are paid on withdrawals.

Withdrawals

The distribution rules for SEP assets are similar to those of a Traditional IRA.

  • SEP owner must be over 59½, disabled, deceased or a first-time home buyer.
  • 10% early withdrawal penalty applies for withdrawals made before age 59½, subject to certain exceptions.
  • Minimum required distributions start at age 70½.

Options

These products are only a few of the retirement and investment solutions offered by BB&T Investment Services, Inc. For information on other products and solutions, please contact a BB&T Investment Services, Inc. Investment Counselor.

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