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Is a SEP Plan Right For Your Business
A SEP is a special type of IRA. Under a SEP plan the employer creates an IRA account for each eligible employee, hence the name SEP-IRA. A SEP is funded solely with employer contributions. Employees do not make contributions to their SEP-IRA retirement account. Any money that goes into a SEP automatically belongs to the employee. Thus, the employee has the right to take his SEP IRA account money with him whenever he stops working for the company.
Any size business can establish a SEP, but the SEP retirement plan is utilized mostly by the self-employed and the small business with few employees. The SEP IRA rules dictate that if the business contributes for one employee, (i.e., the owner), then the business must contribute proportionately for all of the employees. With few exceptions, anyone who works for the business must be included in the SEP. However, you can exclude from participating in the SEP plan anyone who:
? Has not worked for the company during three out of the last five years.
? Has not reached age 21 during the year for which contributions are made.
? Received less than $450 in compensation (subject to cost-of-living adjustments) during the year.
SEP IRA contributions to each employee for 2004 cannot exceed the lesser of $41,000 or 25% of pay for W2 recipients (20% of income for sole proprietors). The SEP IRA contribution limit goes up to $42,000 for 2005, and is subject to cost-of-living adjustments for later years. SEP-IRA rules do not provide for additional catch-up contributions for those 50 years old or over.
A growing number of self-employed individuals with no employees are abandoning the SEP-IRA for a newer type of retirement plan called the Solo 401(k) or Self-Employed 401(k). The two main reasons for the switch are 1) they can generally contribute much more to a Solo 401(k) than they can under a SEP IRA, and 2) Loans are allowed under a Solo 401(k), whereas loans are prohibited under a SEP-IRA.
Example: Henry, age 52, a realtor received $60,000 in compensation from self-employment income in 2004. For 2004, he could contribute a maximum of $27,152 in a Solo 401(k) versus a maximum of $11,152 under a SEP IRA.
However, the Solo 401(k) does not work for businesses with employees. Thus, if your company plans to hire employees or currently has a few employees, the SEP IRA may be your best choice as a retirement plan that is inexpensive and simple to operate.
Daniel Lamaute, CEO of Lamaute Capital, Inc. (http://www.InvestSafe.com) specializes in setting up retirement plans. You may visit http://www.investsafe.com to access a free calculator that will help you estimate what your maximum contribution might be under different plans.
Coca-Cola - A Value Stock?
There has been much talk lately about Coca-Cola and its potential as a value stock - as it now spots a dividend yield of 2.6% (which is the highest dividend yield since the late 1980s) and a P/E or less than 21 - right at the bottom of its five-year low.
Chinas Inscrutable Currency Strategy
Purpose: Expose Opportunities for Smart InvestorsThe move by China's central bank to drop the yuan's rigid peg to the dollar on the day of my return after a three-week trip to Asia left a host of questions unanswered. The basket of currencies that will allegedly determine the value of the yuan going forward was not disclosed.
Oil and Gasoline Price Uncertainties
The Light Crude Continuous Contract hit an all-time high at $70.85 a barrel, while Unleaded Gasoline Futures spiked 50% or $1 a gallon on Tuesday.
Dont Catch a Falling Knife
One of the most common mistakes made by inexperienced investors is trying to "catch a falling knife". This is the phrase used to describe the habit of buying stocks that are in "freefall", and is a poor strategy, albeit common among new investors.
Short Term Savings Products
When you invest, it simply means that you are putting your funds in products, in this case short-term savings vehicles, which will allow you to reap high financial rewards.Here is a list of the more common short term savings products you should consider investing in.
Understanding The Real Rate of Return!
There is one indicator more than any other which determines the health of an economy and it is the Real Rate of Return. Furthermore this is the simplest of all indicators to understand because it determines the safety of assets.
Wit and Wisdom on Money, Wall Street and Success - Part #2
Here are ten more WISDOM packed GEMS that ooffer very unqiue insights to the world of trading and investing.These quotes promote a philosophy which is readily understandable and sometimes hysterical.
Success Trading: Yet More Basic Terminology for New Traders
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Trading Tips No 4: Technical Analysis The Holy Grail Syndrome
Everyone knows that the Holy Grail of investing and trading is a myth. Finding a good technical analysis tool that will give you a trading system that wins all the time is called the holy grail of trading.
Profitability And Stock Turn Rate
The inventory of the typical store represents the largest single element of its total assets. The sale of goods from this inventory is the merchant's chief source of operating profit.
Exchange Traded Funds
They call 'em ETFs.There are hundreds of them.
Why You Need To Buy and Sell Gold Coins (Part 6)
Pre-1933 Gold Outperforms Today's Gold Bullion..
The Myth of the Earnings Yield
AbstractA very slim minority of firms distribute dividends. This truism has revolutionary implications.
Reasons For Joining An Investment Club
Whether you're a novice investor or an experienced stock picker an investment club may be beneficial to growing your investment portfolio. This article explains what an investment club is, why you should have an investment program and finally why you should join an investment club.
Do You Need A Financial Planner?
No matter how much money you make, it pays to keep on top of money coming in and going out. Even if you do a good job of that, there are important times in your life when talking with a professional adviser makes sense.
Shop More, Save More for College Gimmick or Reality?
The man sat in a chair beside a dressing room at a Tampa, Fla. maternity store.
Before You Invest You Must Read This
It is important to answer the following questions before you begin to invest any of your money. The answers to these questions will help to guide you to when, what, where, and how much to invest.
The Three Legged Stool
My paternal grandparents were born near Lake Como, Italy. My grandfather learned how to farm, and he did just that until he died chopping wood at age 88.
Investing and the Fear of Regret and Greed
People tend to feel sorrow and grief after having made an error in judgement.Investors deciding whether to sell or buy a security are typically emotionally affected by whether the security was bought or sold for more or less than the current price.
Seven Investment Terms Everyone Should Know
For those who have never given their financial future a second thought, the term "Financial Planning" could be a scary one. Investments can be a smart way to invest money for your future, but it can be confusing for those who have no experience in the financial business.
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