Common use of SEP Requirements Clause in Contracts

SEP Requirements. A. Beginning January 1, 1994, elective deferrals may not be based on more than $150,000 of compensation, as adjusted in accordance with section 408(k)(8) of the Code for cost-of-living changes. Compensation is the employee's total compensation from the employer (determined without including the SEP-XXX contributions) and include: 1. Amounts received for personal services actually performed (see section 1.219-1(c) of the Income Tax Regulations), and 2. Earned income defined under section 401(c)(2). B. The maximum limit on the amount of compensation an employee may elect to defer under a SEP for a year is the lesser of 15% of the employee's compensation or the limitation under section 402(g) of the Code, as explained below. Note: The deferral limit is 15 percent of compensation (less employer SEP-XXX contributions). Compute this amount using the following formula: compensation (before subtracting employer SEP-XXX contributions) x 13.0435%. C. If you make nonelective contributions to this SEP for a plan year, or maintain any other SEP or qualified plan to which contributions are made for such plan year, then contributions to all such SEPs and qualified plans may not exceed the lesser of $30,000 or 15% of compensation for any employee. If these limits are exceeded on behalf of any employee for a particular plan year, that employee's elective deferrals for that year must be reduced to the extent of the excess. D. If you are a new employer who had no employees during the prior plan year, you will meet the limitation in section 408(k)(6)(B) of the Code (regarding no more than 25 eligible employees during the preceding year) if you had 25 or fewer employees throughout the first 30 days that you were in existence.

SEP Requirements. A. Beginning January 1, 1994, elective deferrals may not be based on more than $150,000 of compensation, as adjusted in accordance with section 408(k)(8) of the Code for cost-of-living changes. Compensation is the employee's total compensation from the employer (determined without including the SEP-XXX IRA contributions) and includexxclude: 1. Amounts received for personal services actually performed (see section 1.219-1(c) of the Income Tax Regulations), and 2. Earned income defined under section 401(c)(2). B. The maximum limit on the amount of compensation an employee may elect to defer under a SEP for a year is the lesser of 15% of the employee's compensation or the limitation under section 402(g) of the Code, as explained below. Note: The deferral limit is 15 percent of compensation (less employer SEP-XXX IRA contributions). Compute this amount xxount using the following formula: compensation (before subtracting employer SEP-XXX IRA contributions) x 13.0435%. C. X. If you make nonelective contributions to this SEP for a plan year, or maintain any other SEP or qualified plan to which contributions are made for such plan year, then contributions to all such SEPs and qualified plans may not exceed the lesser of $30,000 or 15% of compensation for any employee. If these limits are exceeded on behalf of any employee for a particular plan year, that employee's elective deferrals for that year must be reduced to the extent of the excess. D. If you are a new employer who had no employees during the prior plan year, you will meet the limitation in section 408(k)(6)(B) of the Code (regarding no more than 25 eligible employees during the preceding year) if you had 25 or fewer employees throughout the first 30 days that you were in existence.