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Ann Arbor Michigan Form 5305-S: What You Should Know
But you can now do it yourself if you're willing to pay for some extra guidance. The tax advantages of a SEP — Individual Retirement Arrangement — (and the SEP-IRA) are enormous. Here's why. I'll take you through the details. Let's begin. What is an IRA-SEP The idea behind the IRA — Individual Retirement Annuity — is to provide the same tax advantages as a 401(k) to people who work during retirement. People who use their IRA during a later period of retirement can then withdraw the money when they start to collect Social Security benefits — and the account becomes their “regular” IRA, with no tax penalty. It's the same deal that's been available to employees of large companies and government employment for decades. A SEP-IRA is an IRA held in the name of a qualified employee. If the employee is retired and is claiming the Retirement Income Protection Plan Match, that makes this type of plan a traditional IRA-SEP (Individual Retirement Arrangement-IRA). Qualified employee means someone who has a minimum of 1 year of service with an employer that is not a large corporation, a government, or a large financial institution. Qualified employee has been clarified in section 403(b)(9). (For example, I'm not a qualified employee because I worked for one of the following for at least 1 year: · Bank of America · Bank of America — Merrill Lynch · BofA-Merrill Lynch · Citigroup There are plenty of similar businesses in Ann Arbor, and I'm sure there are some that do offer SEP-IRA plans. But we can ignore them for now for simplicity. A SEP-IRA allows employees to withdraw money from an IRA in retirement, with no tax consequences. The IRA-SEP is subject to the regular income tax in the year it's withdrawn, which is usually 6% and depends on whether the employee is single, married filing jointly or married filing separately, or married filing separately and filing a separate return. The IRA-SEP is subject to a 10% penalty if the employee does not have sufficient compensation, and up to 25% if the plan does not meet SEC rules.
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