SEP vs. Keogh
SEP vs. Keogh
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. FNB Wealth Management Services is a trade name of First National Bank. Osaic Institutions,Inc and the bank are not affiliated. Products and services made available through Osaic Institutions, Inc. are not insured by the FDIC or any other agency of the United States and are not deposits or obligations of nor guaranteed or insured by any bank or bank affiliate. These products are subject to investment risk, including the possible loss of value.
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