SEP IRA - For Last Minute Tax Deductions

(PRWEB) February 24, 2003

Virginia - February 24, 2003 - The SEP IRA is one of the few remaining methods for small business owners to cut their taxes for last year. Employer contributions made to a Simplified Employee Pension-Individual Retirement Account, known as a SEP plan, before a company’s tax filing deadline are deductible for 2002. This holds true even if the SEP plan is set up and the contributions are made in 2003.

“A SEP-IRA allows small business owners and sole proprietors in a very simple manner to cut their tax liability by making retirement contributions for their eligible employees,” says Daniel Lamaute, retirement plan specialist at InvestSafe.com and CEO of Lamaute Capital, Inc.

The SEP-IRA has several main advantages for employers, says Lamaute. “Employers get a tax deduction while the SEP-IRA contribution is not taxed as income to the employees. The earnings within the SEP IRA are taxed deferred until the participant pulls money out, usually at retirement.”

Employers can contribute annually up to 25% or $40,000 of an employee’s wages, whichever is less. An employer is not required to make contributions in any year or maintain a certain level of contributions to a SEP plan. But, the employer must contribute the same percentage amount for all eligible employees.

Eligible employees include all employees who are at least age 21 and have been with a company for 3 years out of the immediately preceding 5 years. Employers have the option to establish less restrictive participation requirements, if desired.

“A SEP-IRA is an excellent choice for the entrepreneurs, as well,” says Lamaute “It affords them a vehicle with favorable tax treatment to put away money for their retirement. It’s hassle free, cheap and very easy to set up. Nothing has to be filed with the IRS to establish the SEP-IRA or subsequently unlike other retirement plans that may require IRS annual returns”

Anyone can visit http://www.investsafe.com/smallbusiness.html to get more information on the SEP IRA or other retirement plans for the self-employed and small business owner.