SEPs vs. 401(k)s
There are advantages and limits for employers who choose to offer Self-Employed IRAs (SEPs) instead of 401(k)s. But what are they, and in what cases should they choose one over the other? Our forum members weighed in.
First of all, any business may establish a 401(k) plan, but only self-employed individuals, business owners, or individuals who earn more than $550 in self-employed income may establish an SEP.
An SEP IRA is employer contributions only, and the benefits are that they are easy to set up and maintain, with less paperwork, and with flexible annual funding requirements.
A 401(k) is funded by salary deferral and employer contributions, with the possibility of employer profit-sharing. Key benefits include a salary deferral plan with higher contribution limits, Roth accounts, loans, and deferred vesting available.
- Genworth Financial announces net loss of $122 million in 4Q, $277 million for all of 2016
- ‘Moneyball’ for InsureTech: How CB Insights crunches data differently to identify what’s next
- Lemonade’s ‘Transparency Chronicles’ provide rare look inside a startup carrier’s metrics
- Maximizing the potential of the $12 trillion underinsured U.S. life market
- More Americans buying life insurance direct – and opting for term – than ever before
- February ‘Insure Your Love’ campaign looking for big social media boost
- Are you in a Success Rut?
- Allianz stakes claim as title sponsor for up-and-coming Drone Racing League