Tuesday, February 18, 2014


As the owner of a company and an employer you have to obey some rules before you will let your workers to participate in the SEP IRA plan, they are not strict and quite obvious, but some of the employers seems to forget about them. There are only a few limits that you have to defy. So if you are considering establishing the SEP IRA for you and your employees, you can join only those workers, who can obey these rules:

The participant has to be at least 21 years old..

owing to the fact that your employee has to have worked at least five years with you, there is only a little possibility that any of them will not deal with this restriction because employing younger people in the company is illegal and you probably are willing to have such workers who managed to gain the necessary skills and such a worker is not eighteen ,but older. Young people are also willing to face some new challenges and directly said: their look for other jobs more willingly than their older colleagues who are already employed for a non -fixed term. Moreover, the periods within that the young employees should work, are not so willingly prolonged by their bosses. And a younger person may not choose his or her account with a proper awareness.

The participant has worked for the employer for at least three of the previous five years

this restriction is about loyalty and less problems with bank managers -losing a job is a reason for closing the account, and no one want to have problems with such a worker. And the worker will have to open a new one what will cause new paperwork and new difficulties that no one wants to deal with. It may also guarantee that the employee is employed for a non-fixed term, so he will probably not be made redundant within the nearest three months. This situation assures the managers that the contributions will be made by each worker regularly and no changes have to be undertaken within a longer period. And as I said -it will mean no additional and useless paperwork for the manager, the SEP IRA managers and the workers.

The participant received at least $500 in compensation for the tax year

This restriction seems to have no sense, but on the other hand it may mean that the worker who is willing to participate in the SEP IRA plan is not in red -also he will be able to pay regular contributions to the account and faced the restriction that have to be filled to receive a tax compensation so he earns not a survival salary, but such one from that he will be possible to pay and he or she can afford to invest in his or her own retirement.
Taking all into consideration, the rules are really easy to obey and was created rather to protect the rights of both employers and employees. And of course the interests of the SEP IRA have to be protected as well.

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