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Is a SEP or Simple IRA right for you?

    SEP IRA Simple IRA
  When should the plan be set up? A SEP IRA can be set up any time up to the due date of the employer's return, including extensions. A Simple IRA can be set up any time between January 1st and October 1st of the calendar year.
  What is the last date for a contribution? The SEP IRA contribution must be made by the due date of the employer's return. The due date for a Simple IRA contribution is the following:
  • Matching or non-elective contributions: Due date of employer's return, including extensions
  • Salary reduction contributions: 30 days after the end of the month for which the contributions are to be made
  What is the maximum contribution? The maximum contribution for a SEP IRA is the smaller of 25% of the participant's compensation or $69,000 for 2024 ($66,000 for 2023).

A contribution to a Simple IRA is as follows:

  • Employee Contribution: Salary reduction for 2024 is $16,000 (2023 is $15,500) and for age 50 or over is $19,500 for 2024 ($19,000 for 2023).
  • Employer Contribution: Either matching contribution, up to 3% of employee's compensation, or non-elective contribution of 2%
  What is the maximum deduction? The maximum deduction for a SEP IRA is 25% of a participant's compensation. The maximum deduction for a Simple IRA is the same as the maximum contribution.
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