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Our small business plan to pay 4 employees which are with us

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for over 3 years 15%...
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: 6 years ago.Category: Tax
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Answered in 14 minutes by:
11/1/2011
Tax Professional: Lev, Tax Advisor replied 6 years ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,133
Experience: Taxes, Immigration, Labor Relations
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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.

 

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,133
Experience: Taxes, Immigration, Labor Relations
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