Simplified Employee Pensions (SEPs) and SIMPLE Plans

Setting Up a SEP

Administrative simplicity is one of the primary advantages of simplified employee pensions (SEPs). SEPs are easy to open and require less paperwork than qualified plans. Unlike Keoghs, SEPs require no plan document other than a standardized IRS form (Form 5305-SEP). If you don't adopt an IRS approved prototype plan, you must prepare and adopt a written plan that satisfies the IRS requirements.

Unlike Keoghs, you have until the due date of your income tax return (including extensions) to both establish and contribute to the SEP. Typically, the employees (including you) can choose how their SEP funds are invested.

Where to Set Up a SEP

Your local bank or credit union can open a SEP for you. All that is required is a simple, one-page document (Form 5305-SEP) to be completed by you, the employer. Setup and annual fees, per plan, may apply.

Reporting Requirements

The reporting and disclosure requirements for SEPs are less cumbersome and costly to employers than those for other retirement plans. All that is required is Form 5305-SEP (Simplified Employee Pension-Individual Retirement Accounts Contribution Agreement), a one-page, easy-to-complete form. This serves as the written plan instrument. The form is not filed with the IRS, but it should be kept in the employer's records to support the legal adoption of the arrangement.

IMPORTANT NOTE: Each employee must be given a copy of the completed Form 5305-SEP. Also, each year, a statement must be given to each employee showing any contributions to the employee's SEP.

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*Non-deposit investment products and services are offered through CUSO Financial Services, L.P. ("CFS"), a Registered Broker-dealer (Member FINRA/SIPC) and SEC-registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. General Electric Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.