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Subject:  Re: SEP-IRA Date:  2/22/2000  12:06 AM
Author:  zorloc Number:  19384 of 88775

Are SEP- IRAs only for those who are incorporated? I am a sole proprietor who plans on incorporating in FY 21. If I can establish an SEP-IRA can I roll 20K from a 403b into it? Thanks


You have the option of setting up a SEP, SIMPLE, or Keogh (Qualified Plan). Here are the advantages/disadvantages of each:

SIMPLE: Best if your NET income is low. You can contribute $6000 as an employee (as long as you make at least that much) and then a match as an employer up to 3% of your income (with your income capped at $160,000) to give you a maximum contribution of $10,800. But if you make that much another plan is better.

KEOGH: A Keogh will allow you to contribute more money than a SIMPLE if you NET more than $27,273. Under a Keogh you can contribute through 2 parts: A money purchase plan, and a profit sharing plan. With both parts you can contribute as an employer up to 25% of your income to a maximum of $30,000. Keoghs are a bit harder to setup, require more organization, and frequently involve higher fees than the other types of plans.

SEP: SEPs are the easiest to manage and require the least amount of thought. You can put more money away with a SEP vs. a SIMPLE if you Net more than $50,000, but a Keogh will always allow you to contribute more. A SEP allows you to put away 15% of you first $160,000 in NET income, and thus to a maximum of $24,000 (I know the documents say $30,000, but that is only if you have multiple sources.)

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