How do you decide if you should establish a SEP or a Keogh? You must compare both types of plans and determine which retirement plan best fits your needs. Here is a chart summarizing the key features of SEPs and Keoghs:
Key Features of SEPs and Keoghs
|
Features / Provisions |
SEP |
Keogh |
|
Plan document |
One-page form can be used: IRS Form 5305-SEP |
Full plan document |
|
Maximum contribution Maximum employer deduction |
Lesser of $57,000 in 2020 ($56,000in 2019) or 100% of compensation per employee. 25% of total eligible compensation of employees covered by the plan. |
|
|
Loan provisions |
Cannot borrow against SEP account |
Able to borrow against Keogh account |
|
Eligibility |
Less restrictive rules for employee eligibility |
More restrictive rules for employee eligibility |
|
When to establish |
Have until due date of tax return to establish |
Must be established by December 31 |
|
Annual reporting requirements |
None |
Annual reporting requirement on Form 5500 |
Investment and insurance products and services are offered through Osaic Institutions, INC. Member FINRA/SIPC. TMB Financial Solutions is a trade name of The Milford Bank. Osaic and The Milford Bank are not affiliated.
| NOT A DEPOSIT | NOT FDIC INSURED | NOT GUARANTEED BY THE BANK |
| NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY | MAY GO DOWN IN VALUE | |
