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New Member
posted Mar 23, 2024 11:34:58 AM

explain the diffrints of a Ira /Sep and a Simple

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2 Replies
Expert Alumni
Mar 27, 2024 7:25:39 AM

Yes, I'll do my best to recap these three retirement plans.

 

1) An IRA is an Individual Retirement Account.  The other two are accounts that are sponsored by a business.

  • The maximum contribution for all your IRAs (Traditional and Roth) combined is: 
    • if you're under age 50$6,500 (for 2023) and $7,000 (for 2024) 
    • if you're age 50 or older. $7,500 (for 2023) and $8,000 (for 2024) 
    • These contributions may be limited is you have a retirement plan at work.
    • To determine the amount you can deduct for your IRA, including if you have a retirement plan at work, you can calculate it with the following guidelines.

2) A SEP is a Simplified Employee Pension.

  • A SEP is a retirement savings plan established by an employer for their employees and themselves. 
    • It can also be established by self-employed individuals. 
    • Employers can make tax-deductible contributions on behalf of eligible employees to their SEP IRAs.
    • The SEP IRA contribution limit for 2023 is 
      • 25% of eligible employee compensation, up to $66,000. 
      • The maximum compensation that can be considered for contributions in 2023 is $330,000.
  • You can see more on the IRS publication Simplified Employee Pension Plan (SEP)

3)  A Simple plan to the Simple method to contribute toward employees' and their own retirement savings.

  • The amount an employee contributes from their salary to a SIMPLE IRA cannot exceed 
    • $15,500 in 2023
    • $16,000 in 2024
  • SIMPLE IRA rules: Contributions and limits
    • The company will make a non-elective contribution of at least 2 percent of compensation for all eligible employees earning at least $5,000.
    • Maximum compensation is $345,000 for the 2024 tax year.
    • Make a matching contribution of 100 percent up to the first 3 percent of compensation.
  • You can see more on the IRS publication SIMPLE IRA Contribution Limits

I hope this is enough to get you started.  

Please contact us again with any additional questions.

Expert Alumni
Mar 27, 2024 7:36:19 AM

Yes, I'll do my best to recap these three retirement plans.

 

1) An IRA is an Individual Retirement Account.  The other two are accounts that are sponsored by a business.

  • The maximum contribution for all your IRAs (Traditional and Roth) combined is: 
    • if you're under age 50$6,500 (for 2023) and $7,000 (for 2024) 
    • if you're age 50 or older. $7,500 (for 2023) and $8,000 (for 2024) 
    • These contributions may be limited is you have a retirement plan at work.
    • To determine the amount you can deduct for your IRA, including if you have a retirement plan at work, you can calculate it with the following guidelines.

2) A SEP is a Simplified Employee Pension.

  • A SEP is a retirement savings plan established by an employer for their employees and themselves. 
    • It can also be established by self-employed individuals. 
    • Employers can make tax-deductible contributions on behalf of eligible employees to their SEP IRAs.
    • The SEP IRA contribution limit for 2023 is 
      • 25% of eligible employee compensation, up to $66,000. 
      • The maximum compensation that can be considered for contributions in 2023 is $330,000.
  • You can see more on the IRS publication Simplified Employee Pension Plan (SEP)

3)  A Simple plan to the Simple method to contribute toward employees' and their own retirement savings.

  • The amount an employee contributes from their salary to a SIMPLE IRA cannot exceed 
    • $15,500 in 2023
    • $16,000 in 2024
  • SIMPLE IRA rules: Contributions and limits
    • The company will make a non-elective contribution of at least 2 percent of compensation for all eligible employees earning at least $5,000.
    • Maximum compensation is $345,000 for the 2024 tax year.
    • Make a matching contribution of 100 percent up to the first 3 percent of compensation.
  • You can see more on the IRS publication SIMPLE IRA Contribution Limits

I hope this is enough to get you started.  

Please contact us again with any additional questions.