Business Loan

A September is a particular type of IRA. Under a September program the employer makes an individual retirement account account for each eligible employee, hence the name SEP-IRA. A September is funded solely with employer contributions. Employees do not make parts to their SEP-IRA retirement account. Any money that travels into a September automatically belongs to the employee. Thus, the employee have the right to take his September individual retirement account account money with him whenever he halts working for the company.

Any size business can set up a SEP, but the September retirement program is utilized mostly by the self-employed and the small business with few employees. The September individual retirement account regulations order that if the business lends for one employee, (i.e., the owner), then the business must lend proportionately for all of the employees. With few exceptions, anyone who works for the business must be included in the SEP. However, you can except from participating in the September program anyone who:

• Have not worked for the company during three out of the last five years.

• Have not reached age 21 during the twelvemonth for which parts are made.

• Received less than $450 in compensation (subject to cost-of-living adjustments) during the year.

SEP individual retirement account parts to each employee for 2004 cannot transcend the lesser of $41,000 or 25% of wage for W2 receivers (20% of income for exclusive proprietors). The September individual retirement account part bounds travels up to $42,000 for 2005, and is subject to cost-of-living adjustments for later years. SEP-IRA regulations make not supply for further catch-up parts for those 50 old age old or over.

A growth number of self-employed individuals with no employees are abandoning the SEP-IRA for a newer type of retirement program called the Solo 401(k) or Self-Employed 401(k). The two chief grounds for the electric switch are 1) they can generally lend much more than to a Solo 401(k) than they can under a September IRA, and 2) Loans are allowed under a Solo 401(k), whereas loans are prohibited under a SEP-IRA.

Example: Henry, age 52, a real estate broker received $60,000 in compensation from self-employment income in 2004. For 2004, he could lend a upper limit of $27,152 in a Solo 401(k) versus a upper limit of $11,152 under a September IRA.

However, the Solo 401(k) makes not work for businesses with employees. Thus, if your company programs to engage employees or currently have a few employees, the September individual retirement account may be your best pick as a retirement program that is cheap and simple to operate.