Own a business? Here is why you should choose a 401(k) over a SEP.

The employer contributions are limited to 25% of plan compensation in both 401(k) Plans and SEPs. In a 401(k) Plan however, you can defer $18,000 ($24,000 if you are age 50+) in addition to the employer contributions.

Assuming $100,000 in w2 wages for the owner, here is how it plays out.

SEP 401(k) Plan
Employee Deferrals N/A $18,000
Employer Contributions $25,000 $25,000
Total Contributions $25,000 $43,000

 

Questions? Contact Wendy Frame or Jeremy Palm to discuss.

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