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Business

Employee IRAs

You Should Know:

  • No minimum for
    additional deposits
  • INTEREST PENALTY
    for early withdrawal
  • $25 FEE
    for closing early

Account

SEP IRA SIMPLE IRA
Description Employer-sponsored IRA. Employer-sponsored IRA. Employee makes salary deferral contributions and employer makes matching contributions.
Maximum Annual Contributions The lesser of 25% of first $305,000 compensation or $61,000. $14,000 employee salary deferral.
Employer matches employee contributions up to 3% of salary.
Catch-up Contributions N/A Age 50 and over can contribute $3,000
Tax-Deferred Earnings Yes Yes
Tax-Deductible Contributions Employer contribution is tax deductible. Only employer contribution is tax deductible.
Rollover or Transfer Yes Yes, but only after 2 years of the first contribution.
Distributions
  • Required minimum distributions at age 72.
  • 10% penalty tax for early distributions.
  • Required minimum distributions at age 72.
  • Early distribution within 2 years of first contribution with 25% penalty tax.
  • Early distribution after 2 years of first contribution with 10% tax.