What is a Simplified Employee Pension Plan (SEP)?

As an employer, are you looking for a simple retirement benefit plan that provides many of the tax benefits of other plans? Do you wish for little or no plan administration that's often associated with other more complex retirement plans?

The SEP is an alternative to more complex employer-sponsored retirement plans. This is designed for employers that wish to establish and contribute to a retirement plan for their employees, while keeping plan administration responsibilities to a minimum.

Contribution Opportunities
You may choose to contribute up to 25 percent of compensation, not to exceed $46,000, for the owner and all eligible employees.

Benefits of a SEP

Employer Benefits:

• Employer contributions to a SEP Plan are tax deductible.
• Earnings on employer contributions are not taxable to the corporation.
• The employer may have a better chance to attract and retain high quality employees.
• Employee morale may improve.
• Productivity may improve.

• Employer contributions and employee salary deferrals are not taxed until withdrawn from the plan.
• Earnings on plan assets are not taxed until withdrawn from the plan.
• SEP plans may produce high employee morale.

Payout flexibility at termination or retirement
Employees may make withdrawals in any amount and at any time, however, withdrawals prior to age 59½ may be subject to penalties and income tax. For your convenience, the IRS minimum withdrawals are automatically made for you beginning at age 70 ½.

Flexible, Diversified Investment Options
Waddell & Reed offers you investment diversification and flexibility with many different investments, including aggressive growth funds, growth and income funds, bond funds, income funds and even a money market fund. Not only can you design your own investment strategy, you'll have the opportunity to change allocations should individual goals call for a change in your portfolio.

For more information, contact your Waddell & Reed financial advisor.