If an employer sets up a SEP plan for its employees, can each employee choose a different financial institution for his or her SEP-IRA?
That depends on the SEP plan the employer chooses. Each employee (including the business owner) eligible to participate in the SEP generally must establish his or her own SEP-IRA to receive employer contributions. Although the law does not require each participant’s SEP-IRA to be at the same financial institution, the institution that offers or administers the SEP may require the employer to deposit SEP contributions initially into SEP-IRAs maintained at that institution. Employers should read the SEP plan document carefully and make sure they understand the plan’s terms before signing.
Related Questions
- Can an employer gross up an employees pay who is participating in a Section 125 Plan and, if so, will the employee avoid taxation on that income?
- May an employee participate in a SIMPLE IRA plan if he or she also participates in a plan of a different employer for the same year?
- Must an employer contribute to the Simplified Employee Pension (SEP) for all employees?
