_JP wrote:

- quote -


OK, there's a basic misunderstanding here that needs to be
addressed, and one that creating a lot of confusion. There
are two components to this beast. The SEP is actually the
*plan document* which is adopted by the employer and
determines the amount of the contribution to be allocated to
each employee.

However, unlike other qualified plans, in the case of a SEP
a regular, vanilla individual retirement account is used as
the vehicle to hold the employer contribution. That
contribution is made under a wholly different code section
than the one that authorizes the individual's own
contribution to the account (the $3,000 you reference) and
does not impact that amount aside from counting as being
covered by an employer plan (which can impact the
deductibility, but not the amount the individual can
contribute).

Once the amount goes into the plan, it's funds in the
employee's IRA just like funds that got there via any other
means (prior year's contributions and earnings, rollovers
from qualified plans, etc.) and can be moved under all the
same rules. Similarly, an employer could still put funds
into an account even if the employee had moved funds out of
that brokerage so long as the brokerage still accepts those
funds.

The key requirement to sponsor a SEP is to be an "employer"
which includes, under special rules, an individual that is
self-employed being treated "as if" he was his own employer
for that income.

--
Ed Zollars, CPA
Phoenix, Arizona

Thank you very much for your answer, Brent. However, could you elaborate on
the last point, please? ("...most plans are sold, not bought.")

Also, some more questions.. (I was inspired by your signature - "Be ever
questioning."

1) Since employees are not even going to have a chance to see or touch the
money that are going to be funded into their SEP IRA accounts, if for
whatever reason someone decides to roll it over to some other brokerage
while still working for the same employer, this might complicate making
future deposites a little bit from the employer's point, right? Instead of
writing one check for his/her own and all of his/her employees' SEP IRA, now
he/she would have to make a separate deposit for this person.

2) I heard setting up an SEP IRA account is quite simple, like filling out a
two page form for IRS. What else would be required? Does my business have
to be incorporated if I want to set up an SEP IRA account for myself? Or,
does it only have to be some sort of registered business, regardless of
whether it's incorporated or not (whatever the term "registered" means)?

3) What if this Mr. employer wants to roll over his company's SEP IRA
accounts to another brokerage? Does he have rights to do this rollover on
all the SEP IRA accounts funded by him (his own and his employees'), or he
can't touch his employees' SEP IRA accounts? Also, for the rollover, what
else does the employer need to do? Would it be just like setting up a new
SEP IRA account (filling out the IRS form again), or would it be as simple
as rolling over any other IRA accounts (no IRS form, but just filling out an
application form for the new brokerage and transfer the fund)?

4) Since SEP is an IRA, once the employer's contribution's over
$3,000/$3,500 for a certain individual, that person would be already maxed
out for his/her own individual IRA/Roth IRA, right?

5) I just find this SEP IRA thing really amazing. I mean, what would be the
logic behind allowing up to $30,000 tax deductible contribution, which is
almost 10 times of what's allowed with individual IRA? So, if I run a small
(but very busy) restaurant myself with a bunch of part time employees, and
make $200,000 annual profit, I can get $30,000 tax break just like that??


Thank you.




"Brent D. Gardner, ChFC" <bgardner20[at]cox.net> wrote in message
news4brb.2319$643.2204[at]okepread03...
- quote -

"_JP" <YamYam[at]nospamsplease.megapathdsl.net> wrote in message
news:vqq9pbdsr1uh54[at]corp.supernews.com...
- quote -

A SEP is an IRA - 100% your money with no strings attached. If you want to
cash it in, or roll it over, nobody can tell you what to do. Generally, the
employer is going to select a fund company or brokerage to establish the
account, and then YOU have to select how it is invested, or what you want to
do with the money. Smaller employers may let you select your own custodian,
but this is rare because most plans are sold, not bought.

Brent D. Gardner, ChFC
Chartered Financial Consultant
http://members.cox.net/brentdgardner1378/

"Be ever questioning. Ignorance is not bliss. It is oblivion. You don't go
to heaven if you die dumb. Become better informed. Learn from other's
mistakes. You could not live long enough to make them all yourself." - Hyman
George Rickover (1900-86), Admiral, US Navy, advocated development of
nuclear subs & ships

Hello,

I'm not an employer, nor an employee of a company which provides SEP IRA
benefit. In other words, I'm just curious. (This is my version of
disclaimer for anything stupid or incorrect I may be saying

I guess SEP IRA is a platform, not an actual annuity "product" just like
Traditional and Roth IRA, right? Then, when a generous employer decides to
give his/her employees SEP IRA benefit - the way I understand is that it is
the employer who's going to make payments - does he/she decide which
investment/financial services company to have all the SEP IRA accounts for
his/her employees with?

What if one of the employees wants to have his/her SEP IRA account with a
different company? Is it even possible? My guess is it's going to be just
like IRA "rollover" which is allowed only when the employee is no longer
with the company in case of 401K. What about SEP IRA? Does it work the
same way?

Thank you very much for you answer in advance.

=============================

* I posted this message a few days ago (at least I thought I did), but for
some reason it doesn't look like went through. So, I am posting it again.
If my original posting did get posted, I am very sorry for the repetition.