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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10136
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Need answers on how to open SEP IRA, What are the limits and

Customer Question

Need answers on how to open SEP IRA, What are the limits and How to go about it
Submitted: 4 months ago.
Category: Tax
Expert:  Lane replied 4 months ago.

Hi,

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You can open a SEP IRA with essentially any custodial platform that handles IRA's.

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Banks, brokerage firms, on-line brokerage accounts, etc. etc.

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The limits are based on your entity type.

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Therer are two limits that apply.

(1) The overall 2016 SEP IRA contribution limit is $53,000. Contributions to a SEP IRA are generally 100% tax deductible and investment earnings in a SEP IRA grow taxed deferred.

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(2) The second limit depends on whether your company is a corporation (C-Corp or S-Corp) - where you receive a W-2 - OR you are self-employed ( a sole proprietor, partner, LLC member not electing corporate taxation for your entity).

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An S or C corporation, an incorporated partnership or a LLC electing to be taxed as a corporation pays the business owner a W-2 salary. In this situation, the annual SEP IRA contribution can be between 0% to 25% of the owner's W-2 salary up to the SEP IRA contribution limit. SEP IRA contributions are generally 100% tax deductible as a business expense.

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When a SEP IRA is established for a unincorporated business such as a sole proprietorship, unincorporated partnership or a LLC electing to be taxed as a sole proprietorship, annual contributions are made into your SEP IRA account between 0 to 20% of your net adjusted self employment income (or net adjusted business profits).

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And again, you ca go to any bank OR use a brokerage firm, or likely the simplest (and least costly way) is to open an account online with one of the online brokerage firms OR mutual fund families:

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here are a few examples:

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https://invest.tdameritrade.com/grid/p/accountApplication

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https://www.fidelity.com/retirement-ira/small-business/sep-ira

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https://investor.vanguard.com/what-we-offer/small-business/sep

Expert:  Lane replied 4 months ago.

Please let me know if you have any questions at all.

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If this HAS helped, and you DON’T have other questions … I'd appreciate a positive rating (using the stars or faces on your screen, and then clicking “submit")

Otherwise I’m working for no crediting at all here

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Thank you!

Lane

I hold a law degree, (Juris Doctorate), with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in financial accounting & tax, a BBA, and CFP & CRPS designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, since 1986