SEP IRA contribution limits 2010
1.SEP IRA is most beneficial most owners of small businesses without any employees or self employed professionals.
2.SEP IRA contribution limits 2010 are set at $49,000 upto a limit of $245,000
3.Besides small business owners,sole propriters,incorporated companies also can avail of SEP IRA even if they have a 401K
4.For businesses without incorporation the maximum contribution is pegged at 20% annually.
5.Benefits include a 100% tax deductions on all contributions made into it.Interest in the SEP IRA is maintained tax deferred till you withdraw funds from it.
6.There are no tax deductions till the age of 59.5 years,after that it is taxed.If you withdraw funds before you attain an age of 59.5 years then there is a penalty of 10% imposed.
7.Contributions for employees can be flexible and the employer can choose to contribute anything from 0% to 25% to the scheme.
8.A disadvantage of a SEP IRA against a individual 401k is that you can avail of a loan against your balance in a 401k,whereas you cannot get a loan against your SEP IRA.
8.Contributions made by incorporated businesses is based on the w-2 income,where the maximum contribution will be 25% of the w-2 income.
9.compared to 401k that allows a maximum contribution of $50,000 as compared to $49,000 to the SEP IRA.