Retirement Savings

Employer Sponsored IRA Plans

Cashmere Valley Bank can act as your trustee for Simplified Employer Pension (SEP) and SIMPLE IRA plans.  We do not charge any service fees for administering these plans. 

Compare Plans

 

SIMPLE IRA Plan

SEP Plan

Product Benefits

A salary-deferral type retirement plan for small businesses and non-profit organizations funded by both the employer and the individual.

A retirement plan established and funded by an employer in which contributions are directed into a 

Traditional IRA maintained by each employee.

Plan Eligibility

For small businesses with less than 100 employees that do not provide benefits under another qualified retirement plan. 

N/A

Employee Eligibility

Must earn $5,000 or more annually.

Must meet the following requirements:

  • Has reached age 21
  • Has worked for you in the last 3 of the last 5 years
  • Received at least $550 in compensation from your in 2010

Who Can Make Contributions

Employer and Employee

Employer only

Employee Maximum Annual Contribution

Employee contribution are limited to:

  • $11,500 if under age 50.
  • $14,000 if age 50 or over.

N/A

Employer Maximum Annual Contribution

Employers are generally required to match employee contributions up to 3% of the employee’s compensation.

Employers may instead choose to make non-elective contributions of 2% of an employee’s compensation (up to $245,000 of compensation).  This option requires contributions to be made for all eligible employee regardless if they participate in salary deferral.

Lesser of $49,000 or 25% of participant’s compensation.

Tax Treatment of Employer Contribution

Deductible.

Deductible up to 25% of all participants’ compensation.

Tax Treatment of Employee Contribution

Tax Deferred.

Participation in a SEP plan may affect the deductibility of an individual’s Traditional IRA contributions.

Individual Can Opt-Out

Yes, if they have not earned $5,000 or more in service to the employer, OR if they can be expected to earn $5,000 from the employer in the current year.

No

Individual Control of Investments

Yes

Yes

Early Distribution Penalty

25% of distributions within first two years of employee’s participation; after two years: 10% of distributions for participants under age 59½.

10% of distributions for participants under age 59½, unless you meet an early distribution penalty exception.

Additional Helpful Information

For detailed information about Retirement Plans for Small Business consult a tax professional or visit www.irs.gov.  The following IRS publications may also be of assistance:

The Annual Percentage Yield (APY) is current as of <current date> and is subject to change. $10 minimum average daily balance is required to obtain the APY.