How a SEP IRA Works - Contributions, Benefits, Obligations and IRS Form 5305-SEP

In this video, I show you how a SEP IRA works. I make it easy to understand the plan's benefits, limitations, rules and obligations if you have employees. I also show you how to calculate SEP IRA contributions and very importantly, how to fill out IRS Form 5305-SEP - the single form needed for the Internal Revenue Service to set up a SEP IRA.

[@ufjazzman]

This is such a helpful clarification in my CFP studies. Thanks.

[@HolySchmidt]

You are welcome

[@FunnyVideosLover]

Very good information. Thank you!

[@yesIknow277]

Great video. Explained well.

[@NaturalBeautyHealthy]

good timing to come to your channel. I am plan to open Sep IRA account this week. Thanks for the info, explaining very clear. Also subscripted your channel.

[@lostinmyspace4910]

I am receiving SEP IRAs from my boss. How do I report them on Form 8606? Do I report them on line 1 as nondeductible contributions? And line 2 the basis from the previous year? Is SEP IRA considered traditional IRAs on Form 8606? I am just stuck on this issue. Thank you in advance. THUMBS UP!!!

[@BrinkWeb]

Great video! I am an employee of an S Corp. If my employer makes the contributions, can I (the employee) still get a deduction because it is tax deferred?

[@tomoko4387]

Thank you for the information! I subscribed! 2020 was a bad year and by calculation I could only contribute about $1500. I already filed my tax in Feb and got refunds. Is it worth filing an amendment to include my $1500 contribution to SEP IRA? Thank you.

[@HolySchmidt]

You bet. Welcome!

[@smilemaker6844]

My question is how do employees deposite the the check they received from their employer. When I deposite mine, the check is made or written to the firm/bank under benefit of SEP IRA. As an employer can I write a check to them like mine?

[@DanielJStone]

Thanks for the information. If you make an excess contribution to a SEP IRA is the process similar to Roth IRA for correction? There's plenty of info on correcting an excess contribution for a Roth IRA, but not so much for SEP.

[@HolySchmidt]

That depends on a few variables. How much and when are two important ones

[@DanielJStone]

​@@HolySchmidt October 15th, 2020 is the due date for corrections to be made. The excess contribution to SEP was $887 in 2019.

[@julietravels6400]

Thanks for this video. I have a SEP IRA (and am self-employed, no employees). When making my contribution for tax year 2019 before the filing deadline (in July 2020), I miscalculated my maximum contribution and transferred almost $200 more than the maximum amount into my SEP IRA account. I caught the error and submitted my 2019 tax return with the correct maximum contribution amount. Since my brokerage firm does not capture information about the tax year for which the contribution is intended, and the allowable period for making SEP IRA contributions for consecutive tax years overlaps, would I be able to simply reduce funding into my account when I file my 2020 taxes and avoid all the complicated excess/over contribution corrective actions? In other words, if the amount I added to my SEP IRA account during CY 2020 was $25, 200, and my maximum contribution for 2019 and 2020 were $25,000 and $20,000 respectively, could I just fund the account with $19,800 before April 15, 2021? And since I reported $25K on my tax return as my contribution for 2019, should I report a $20K (v $19.8K) SEP IRA contribution on my 2020 taxes?

[@user-ep7el6vt7o]

I have a sep But my limit is 6000$ !!!Why is that ?

[@DigitalNetworkInsights]

@@user-ep7el6vt7othat’s probably your individual investment amount you personally can add to the SEP IRA your employer funds. But you may be referring to an amount left or remaining in the year you personally could add onto the SEP IRA above and beyond your employer contribution for that year. Not financial advice.

[@dennisnoone7427]

can you have both sep and traditional, for a single self employed person, and differ the tax liability to a later day?

[@genep8110]

Do these employees have to be 40hr/full time employees? What is the guideline to be a full time employee?

[@thehiddenexperience4116]

how would you fill out 5305-form for someone who works for gig apps like Doordash/Uber/Instacart etc.. ??

[@gauravkhanal6122]

What about contractors aka 1099?

[@thirdeyegphi]

Totally confused on the limits and the formulas you used.

[@johnbultemq8026]

The sep-ira can be converted to a Roth