Sep-Investment - A Retirement Plan for Self-employed Individuals

A Simplified Employee Pension (SEP) is a retirement investment plan for self individuals and employers. They can establish a SEP for all eligible employees anytime prior to their own tax-filing end date. In this plan, the employer is allowed for tax deduction. The employees who wish to set up a SEP account must establish a traditional IRA and rename it as SEP IRA in order to deposit contributions.

Investment Options

The SEP IRA is unique because of its vast investment types and the number of assets one own in the account. List of few assets one can invest with the help of SDIRA are Real estate, Precious metals, Intellectual properties, Hedge funds, Crowd funding, Mortgages, Stocks, Structured settlements and Tax Lien Certificate. Even though the investment options are large, some investments are not eligible in this plan. According to IRA publication, investment types such as collectibles, coins and life insurance are not used with this retirement account.

SEP Contributions

The SEP contributions are generally deposited in the traditional IRA account. But, some financial institutions require the traditional IRA labelled as SEP IRA in order to receive the SEP contributions. The contributions made by the employers have certain limits. It must not exceed 25 percent of employee’s compensation or 56,000 dollars of employee’s compensation. Because of the SEP IRA plan is based on traditional IRA, the same traditional IRA rules are also applicable to SEP IRA. Common rules include distribution, investment, contribution and deduction rules. Also, the SEP IRA account must meet the document requirement for both SEP IRA and Traditional IRA.

SEP Withdrawal Rules

The contributions and earnings in SEP investment can be withdrawn at any time. The withdrawal is included in the in the tax on the year received. The SEP contribution and earnings must be distributed evenly to all investors and it satisfies the IRS minimum distributions. Normally, a 10 percent tax rate applies if an investor makes a withdrawal before the age 59½. The contribution amount in SEP may be tax-free if it is combined with other retirement plans and individual retirement account.

Financial Planner - Your guide for financial planning advice

In this modern age and economy, everyone should know about savings and financial planning to protect themselves from the abrupt financial crisis. Savings are great, but it alone might not help us in long term goals and on the other hand Financial Planning gives you the right direction to manage your wealth, save and increase wealth for both short and long term. That’s why People who know the value of planning always rely on Financial Planning to manage their money. A Financial plan will provide you a road map to make your life financially stable. It can make your life less stressful, more fun, and more successful.

But most people don’t possess the required knowledge or skills to manage their finances on their own.  And that’s where a professional like Financial Planner will come for help. A Financial Planner is a certified professional who works for the people to give advice and guide them on the financial planning of their finances.  They give their service for all kinds of financial services for tax planning, investment planning, retirement planning, estate planning, insurance planning, and even Business plans for business owners. That’s what the job of Financial Planner is; they will use their skills to create a plan that matches the client profile and give a detailed financial plan that covers all the aspects.  Here are the 6 steps that are followed by a Financial Planner to give a proper financial plan to a client.

Examines the current financial situation – Firstly, the financial planner will gather all the information regarding your present financial situation such as Total Net worth, cash flow statement, tax returns, investment profiles, insurance, pension plans, etc.

Identify the goals – Then, they will help the client to identify both the financial and personal goals that are realistic, specific, measurable and time-bound by analyzing the current situation. And also satisfy their future goals such as children higher education, marriage, world tour, etc.

Risk Identification – Financial planner will identify different financial obstacles in achieving the financial objectives as high tax returns, improper cash flow period, insurance coverage issues, etc.

Financial plan designing – After identifying goals and risks, the financial planner will create a financial plan that covers all the financial goals and overcomes these risks associated with it.

Implementation of the plan – Financial Planner executes the plan to reach the desired finance goals and independence.  

Guidance – Lastly, financial planner provides periodic guidance and revision of the plan to ensure that their client reaches their financial goals.

Financial Planners serve as an ultimate savior when it comes about financial planning to reach our desired goals both financial and personal wise. They are the only persons who can make your life financially independent.