1 SMALL BUSINESS RETIREMENT PLANS COMPARED SAR-SEP SEP (existing) Deadline for Due date of N/A--must setting up plan employer's already exist return, including extensions (usually April 15 of following year) Plan loans No No allowed Effect of adding Must cover Must cover employee(s) (unless earned (unless earned less than $550 less than $550 in 2009) in 2009) Maximum Lesser of 25% of $16,500 plus allowable compensation match; total contribution for or $49,000 subject to annual owner in 2009 additions limit Calculation of Does not include Does not include owner's elective deferrals elective deferrals compensation Over age 50 No $5,500 catch-ups (in 2009) allowable?
The rules with respect to the exclusion for SEPs also apply to SAR-SEPs, but the picture is a little more complex for SAR-SEPs.
7) Under the ADP rules for SAR-SEPs, the deferral percentage for each highly compensated eligible employee who participates must be no more than 1.
No new SAR-SEPs may be adopted after 1996; however, SAR-SEPs existing on December 31, 1996 may continue in effect and add new participants.
Similar increases apply to 403(b) and 457 plans as well as SAR-SEPs.
Similar increases apply to 403(b) plans offered to teachers and employees of nonprofits; 457 plans, found mostly in state and local governments; and SAR-SEPs, a salary-reduction type of Simplified Employee Pension.
A popular form of the SEP is the Salary Reduction SEP or SAR-SEP, which allows the employee a choice between taking his or her employer's SEP contribution in cash or electing to have the employer's contribution deposited into the SEP.
Like other qualified employer-sponsored plans, the major benefit of a SAR-SEP is Tax Advantages.
Finally, contributions and earnings in a SAR-SEP compound on a tax deferred basis.
Flexibility: You can change your SAR-SEP contributions to suit your winery's cash flow.
Low Cost: A SAR-SEP allows you to provide a valuable retirement benefit without the complicated administration and high costs typically associated with company sponsored retirement plans.