Difference between revisions of "Salary Reduction Simplified Employee Pension Plan"

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{{Employer provided retirement plans sidebar}}
 
{{Employer provided retirement plans sidebar}}
  
A Salary Reduction Simplified Employee Pension Plan ('''SARSEP''') is a simplified employee pension ([[SEP]]) plan set up before 1997 that includes a salary reduction arrangement. Under a SARSEP, employees can choose to have the employer contribute part of their pay to their Individual Retirement Account or Annuity (IRA) set up under the SARSEP (a SEP-IRA). A SARSEP may not be established after 1996. However, for SARSEPs set up before 1997, eligible employees hired after 1996 must be allowed to participate.<ref>IRS, [http://www.irs.gov/Retirement-Plans/Plan-Sponsor/Salary-Reduction-Simplified-Employee-Pension-Plan-SARSEP Salary Reduction Simplified Employee Pension Plan (SARSEP)], viewed December 15, 2014.</ref>
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A '''Salary Reduction Simplified Employee Pension Plan''' (SARSEP) is a simplified employee pension ([[SEP]]) plan set up before 1997 that includes a salary reduction arrangement. Under a SARSEP, employees can choose to have the employer contribute part of their pay to their Individual Retirement Account or Annuity (IRA) set up under the SARSEP (a SEP-IRA). A SARSEP may not be established after 1996. However, for SARSEPs set up before 1997, eligible employees hired after 1996 must be allowed to participate.<ref>IRS, [http://www.irs.gov/Retirement-Plans/Plan-Sponsor/Salary-Reduction-Simplified-Employee-Pension-Plan-SARSEP Salary Reduction Simplified Employee Pension Plan (SARSEP)], viewed December 15, 2014.</ref>
  
 
The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) changed many of the Internal Revenue Code's requirements and limits for qualified plans and IRAs. If a model SARSEP plan was used, an updated model plan should have been adopted by the end of 2002 to take advantage of new law changes.<ref>IRS, [http://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-SARSEPs#3 Retirement Plans FAQs regarding SARSEPs], viewed December 15, 2014.</ref>
 
The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) changed many of the Internal Revenue Code's requirements and limits for qualified plans and IRAs. If a model SARSEP plan was used, an updated model plan should have been adopted by the end of 2002 to take advantage of new law changes.<ref>IRS, [http://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-SARSEPs#3 Retirement Plans FAQs regarding SARSEPs], viewed December 15, 2014.</ref>

Revision as of 23:40, 15 December 2014

A Salary Reduction Simplified Employee Pension Plan (SARSEP) is a simplified employee pension (SEP) plan set up before 1997 that includes a salary reduction arrangement. Under a SARSEP, employees can choose to have the employer contribute part of their pay to their Individual Retirement Account or Annuity (IRA) set up under the SARSEP (a SEP-IRA). A SARSEP may not be established after 1996. However, for SARSEPs set up before 1997, eligible employees hired after 1996 must be allowed to participate.[1]

The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) changed many of the Internal Revenue Code's requirements and limits for qualified plans and IRAs. If a model SARSEP plan was used, an updated model plan should have been adopted by the end of 2002 to take advantage of new law changes.[2]

References

  1. IRS, Salary Reduction Simplified Employee Pension Plan (SARSEP), viewed December 15, 2014.
  2. IRS, Retirement Plans FAQs regarding SARSEPs, viewed December 15, 2014.

External links