Welcome to Executive Benefit Plans, Inc.

 

Main Link Column
Select this link Retirement Plans
Select this link Strategies
Select this link Employee Benefits
Select this link Individual Benefits
Select this link Participant Info
Select this link White Papers
Select this link Consulting Service
Select this link Proposal Request
Select this link Administration
Select this link Contact
Select this link News
Select this link Blog
Select this link Home
 

Simple IRA vs. SAR-SEP

Requirements

 SIMPLE IRA PLAN

 SAR-SEP

Eligible employers

100-employee rule must be satisfied

No more than 25 eligible employees

Document

Form 5305-SIMPLE or Form 5304-SIMPLE, prototype or individually-drafted

Form 5305A-SEP, prototype or individually-designed

Effective date

No earlier than January 1, 1997. New SIMPLE-IRA plans may be effective on date other than January 1, but generally not later than October 1 of a calendar year

Must have been executed by December 31, 1996, to continue beyond 1996

Eligible employees

Any employee earning $5,000 of income in 2 prior years, and expected to receive $5,000 in current year

Service with the employer in at least 3 of the last 5 years

Exclusive plan

Yes

No

Related employer rules

Apply

Same

Coverage testing

Not applicable

Same

Elective contributions

Limited to $10.500 (indexed 2008) per calendar year; 60-day election period prior to beginning of year (but additional election periods permitted)

Limited by section 402(g) limit and by section 415 limits

Matching contributions

Capped at 3% of compensation (may be reduced down to 1% cap in 2 of 5 years)

Not permitted

Non Elective contribution

2% of compensation, but can only be made instead of matching contributions

Employer discretionary contribution permitted, but not required (except to the extent required to satisfy top heavy)

Nondiscrimination tests

Not applicable

Each HCE's elective deferrals  for the year cannot exceed 1.25 times the average of the deferral percentages of the eligible NHCs

Vesting

All contributions 100% vested

Same

Top heavy rules

Not applicable

 Applicable

Section 415 limits

Not applicable

Applicable

Percentage of compensation limit on contributions

None on total contributions. Matching contributions and nonelective contributions are limited by status to a specific percentage of compensations

Total of employer's SEP contributions, if any, plus employee's salary reduction contributions to SARSEP limited to 15% of compensation

Compensation dollar limit

Only applies to nonelective contributions

Applies to employer's discretionary SEP contributions, if any

Section 402(g) limit

Applies

Same

Employer deduction

No 15% deduction limit

15% deduction limit

Form 5500 filing

No

Same

Trust accounting

Not applicable

Same

Withdrawals

Permitted anytime; 25% tax penalty applies if employee is under 59-1/2 and withdrawal is in first 2 years

Same as SIMPLE-IRA, except no 25% penalty

Minimum distributions

Permitted anytime; 25% tax penalty applies if employee is under age 59-1/2 and withdrawal is in fir 2 years

Same as SIMPLE-IRA, except no 25% penalty

Minimum distributions

Must start by April 1 of year following calendar year in which age 70-1/2 attained

Same

Rollovers

Only into another SIMPLE-IRA or other IRA (including a SEP-IRA)

Into SEP-IRA or other IRA (but not to SIMPLE-IRA) (Section VI, Part B)

Joint and survivor rules

Not applicable

Same

Tax exempt organization

May maintain if 100-employee test is satisfied

May maintain only if arrangement was grand fathered under TRA '86 (i.e., established by July 1, 1986)

Governmental employer

May maintain if 100-employee test is satisfied

May maintain only if arrangement was grand fathered under TRA '86 (i.e., established by July 1, 1986)

Plan year

Must be calendar year

Must be either calendar year or the employer's taxable year

For Professional Consultation Services Contact:
Executive Benefit Plans, Inc.
Suite 1188
1186 Route 56 East
Apollo, PA 15613-9725 USA

Phone: 800-622-2411 or Fax: 724-478-1688
E-mail -
info@benefitplans.com

Contact Us  |  Proposal Request

To Open, Review, and/or Print our Corporate Brochure - Click Here 

Retirement Plans

Select this link Consulting Services

Select this link Qualified Plans

   Select this link Savings Calculator

   Select this link  401k

   Select this link Safe Harbor 401k

   Select this link Roth 401k

   Select this link SIMPLE 401k

   Select this link Profit Sharing

   Select this link Money Purchase

   Select this link Defined Benefit

   Select this link Cash Balance

   Select this link Successor Plan Rule

   Select this link IRC 401(a)

   Select this link ERISA 404(c)

   Select this link Prohibitive Transactions

   Select this link Fiduciaries

   Select this link Contribution Limits

   Select this link Controlled Groups

Select this link Other Plans

   Select this link IRAs

   Select this link 419(e)

   Select this link SEPs

   Select this link SARSEPs

   Select this link SIMPLE IRA

Other Links

Select this link Tests

    Select this link ACP Test

    Select this link ADP Test

Select this link Restatements

Select this link Amendments

Select this link Mistakes

Select this link Catch-up

Select this link Funding Limits

Select this link EGTRRA Q&A

Select this link Conduit IRA

Select this link Pricing

Select this link Quote

Select this link White Papers

Select this link FAQs

Select this link Glossary

 

 

Information is provided for review and consideration only. Please consult legal and tax advisors for practical advice pertaining to your business and personal situations.

This page was last reviewed and/or updated on Monday, October 21, 2013 09:58 AM

 

Privacy Statement - Executive Benefit Plans, Inc. Copyright 1996 - 2013 All Rights Reserved - Legal Statement
Website Powered by UHSystems