56
TOBACCO OUTLET BUSINESS
MAY/JUNE 2013
In Focus: RetIRement
How Popular Retirement Plan Options Stack Up
SEP
SIMPLE IRA
Profit Sharing (Keogh) Individual 401(k)
Key Advantage
Easy to set up and
maintain
Easily established with
minimal IRS reporting
requirements
Permits employer to
make large
contributions for
employees
Permits business
owners with no
salaried employees
to make large
contributions
Employer Eligibility
Any employer with
one or more employees
Any employer
with 100 or fewer
employees that does
not currently maintain
another retirement
plan
Any employer with one
or more employees
Any sole proprietor
and his or her spouse
who works in the
business
Employer’s Role
May use IRS Form
5305-SEP
to set up the plan.
No annual filing
requirement for
employer
May use IRS Forms
5304-SIMPLE
or 5305-SIMPLE to
set up the plan. No
annual filing
requirement for
employer
May need advice from
a financial institution or
employee benefit adviser.
Must file annual Form
5500
A one-participant
401(k) plan is
generally required to
file an annual report
on Form 5500-SF
if it has $250,000 or
more in assets at the
end of the year
Contributors
to the Plan
Employer
contributions only
Employee salary
reduction
contributions and
employer
contributions
Annual employer
contribution is
discretionary
Both business
owner and company
contributions are
discretionary
Maximum Annual
Contribution
(per participant)
Up to 25 percent of
compensation
but no more than
$50,000 for
2012 and $51,000 for
2013
Employee:
$12,000 in 2013.
Participants age
50 or over can make
additional
contributions up to
$2,500;
Employer: either
match employee
contributions
or contribute
2 percent of each
eligible employee’s
compensation
Up to the lesser of
100 percent of
compensation 1 or
$51,000 for 2013.
Employer can deduct
amounts that do not
exceed 25 percent
of aggregate
compensation for all
participants
Business owner:
100 percent of
compensation up to
IRS limit for 2013 of
$17,500 ($23,000 if
age 50 or over);
Company
Contribution:
25 percent of
compensation as
defined by the plan.
Total combined
contributions not to
exceed $51,000 in
2013
56
TOBACCO OUTLET BUSINESS
MAY/JUNE 2013
