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.