SEP and SIMPLE IRAs
Chapters in this video
- 0:00 Small business plans under IRC and ERISA
- 1:51 SIMPLE IRA: Savings Incentive Match Plan for Employees
- 2:31 Employer match vs 2% nonelective contribution
- 3:17 Enhanced 10% limit election trap
- 3:44 25% early withdrawal penalty in first two years
- 4:47 SEP IRA: Simplified Employee Pension and employer-only rule
- 5:49 Uniform percentage and zero annual filing
- 7:01 Tax-filing-deadline setup flexibility
- 7:37 Self-employed 20% effective rate trap
- 8:37 Side-by-side comparison grid of all major plans
- 9:21 Rapid-fire exam recap
What this video covers
- Which small business retirement plan applies to an employer with 100 or fewer employees versus a self-employed individual with zero employees
- How SIMPLE IRA employee deferral limits work in 2026, including the enhanced 10% limit election and its adjusted dollar amounts
- Why the employer contribution in a SIMPLE IRA must be either a 3% dollar-for-dollar match or a 2% nonelective contribution to all eligible employees
- The unique 25% early withdrawal penalty during the first two years of SIMPLE IRA participation, and when it drops to the standard 10%
- Why SEP IRA contributions are employer-only, with no employee elective deferrals permitted, and the resulting lack of catch-up contributions
- How the 25% of compensation limit for common-law employees becomes an effective 20% rate for self-employed owners due to circular income math
- Why SEP IRAs avoid annual Form 5500 filings through Form 5305-SEP, and the tax-filing-deadline flexibility for plan establishment and funding
Read the full lesson, free
This video's complete written lesson is free to read in the CertFuel app, no signup wall. The complete Series 65 course also includes adaptive practice questions and spaced-repetition flashcards, free through December 31, 2026.