Employer Plans


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 (2012 limit -$50,000; 2013 limit - $51,000 ). 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.


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