Salary Reduction Simplified Employee Pension Plan
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
- ↑ IRS, Salary Reduction Simplified Employee Pension Plan (SARSEP), viewed December 15, 2014.
- ↑ IRS, Retirement Plans FAQs regarding SARSEPs, viewed December 15, 2014.
External links
- IRS, Operating a SARSEP
- IRS, SARSEP Checklist, It is important to review the requirements for operating your SARSEP every year.
- IRS, SARSEP Plan Fix-It Guide, Common Problems, Real Solutions, Tips on how to find, fix and avoid common mistakes in SARSEP plans.