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Lev
Lev, Tax Advisor
Category: Tax
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Our small business plan to pay 4 employees which are with us

Resolved Question:

Our small business plan to pay 4 employees which are with us for over 3 years 15% of their gross salaries towards SEP IRA is this payment subject to social security and medicare taxes? Should this contribution be on w-2 form ?
Submitted: 5 years ago.
Category: Tax
Expert:  Lev replied 5 years ago.

Hi and welcome to Just Answer!

The Simplified Employee Pension (SEP) IRA plan is fully funded by the employer - no employee contributions allowed and all contributions are vested.

Employer's contributions into retirement plans are not subject of FICA (social security and Medicare taxes).

See for reference IRS publication 15, page 33 - http://www.irs.gov/pub/irs-pdf/p15.pdf -

Retirement and pension plans.

Let me know if you need any help.

 

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