Employer Plans

SEP IRAs

A SEP IRA is a Traditional IRA account that is established by an employer for eligible employees. Generally, all employees are eligible; however, the employer can choose to exclude:

• Employees under 21 years old,
• Employees who have not worked in (up to) 3 of the past 5 years, and
• Employees not earning the minimum annual amount of $550.00

Once an employee meets the company's eligibility requirements, they cannot be excluded from the Plan.

Each year the employer determines the contribution level, which can range from $0 to up to 25% of each eligible employee's compensation (salary, bonuses, tips, etc.) not to exceed specified limits (2009 limit -$49,000; 2010 limit - $49,000 ). Contributing employers should consult with an accountant and/or tax advisor for actual contribution limits allowed.

• The contribution percentage must be the same for the employer and all eligible employees.
• The employer is not required to make contributions each year.
• Any employer, including a sole proprietor with no employees, can establish a SEP for the benefit of all eligible employees and themselves.

The employer and each eligible employee must establish an IRA Plan at a financial institution. Once the SEP Master Plan is established using the 5305-SEP document, the employer provides a copy to each eligible employee. The employee must open an account in order to receive employer contributions.

To learn more about SEP IRA Plans through Citizens, call Retirement Services at 1-800-948-7200.

Qualified Retirement Plans

A Qualified Retirement Plan Account was once known as a Keogh. These types of Plans are for small businesses and may also be referred to as Profit Sharing, Money Purchase or HR-10 Plans. A Qualified Plan is opened by an employer, the "Plan Administrator", for him/herself and all qualified employees ("Plan participants").

Qualified Plans follow specific federal guidelines to qualify as tax-deferred employee retirement savings plans.

To learn more about Qualified Plans through Citizens, call Retirement Services at 1-800-948-7200.