Flexible Small Business Retirement Plan
Minimal cost and admin work to help employees save for retirement
What people are saying
The Langan's have been family friends of mine since we ran track together in High School at Cumberland Valley and in college at Penn State.
When it came time for me to invest in my retirement and receive financial advise, it was a no brainier for me.
I love that they are a family business and even though I am a friend, they treat all of their clients as family and for that reason alone, I would recommend them to anyone seeking financial or investment advice.
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I’ve been working with Langan Financial for about a year now.
They are extremely knowledgeable and provide great investment services to their clients.
Working with Langan Financial is an absolute pleasure, for their friendliness, professionalism and deep financial experience.
I highly recommend them!
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What is a SEP Plan?
A SEP Plan, also known as a Simplified Employee Pension plan, is a retirement plan designed for small business owners and their employees to contribute towards their retirement.
These plans are simplified versions of 401(k) plans.
In it, each contribution is made to an individual retirement account for each plan participant. Like a 401(k) plan, employers are allowed a tax deduction for contributions made to a SEP IRA.
How Do SEP Plans Work?
Setting up a SEP plan is very simple. There are three basic steps required by the IRS, that must be satisfied:
- Adopt a formal written agreement from one of the required IRS model SEP documents.
- Educate each eligible employee about the SEP plan.
- Set up an individual account called a SEP IRA for each eligible employee.
Who Are Simplified Employee Pension (SEP) Plans Ideal For?
SEP plans are ideal for small businesses that do not have a steady cash flow or are on a shoestring budget, but still want to provide a retirement benefit to their employees.
These plans are very easy to set up and operate, with minimal cost and administration. There are no filing requirements and employers can change the contribution amount each year, allowing for flexibility.
Employers do not have to worry about filling out Form 5500 as if it was a 401(k) plan. Rather owners simply need to check the "Retirement Plan" box on the W-2 Form.
SEP IRA Eligibility Requirements
While setting up a SEP plan is easy, there are eligibility requirements employees must reach in order to participate.
Small business owners are able to amend the plan document to change eligibility requirements for participants to either make the plan more restrictive or less restrictive.
Once these changes are made, they must be followed by all plan participants, including the owner.
7 Pros of a Simplified Employee Pension Plan
- Easy to set up
- Easy to operate
- Low administrative expenses
- Annual contributions can be flexible
- No filing requirements
- Can have in-service withdrawals, however, are subject to an additional tax if under the age of 59.5
- You may roll over your individual SEP account into most qualified plans and IRAs
4 Cons of a Simplified Employee Pension (SEP) Plan
1. No catch-up contributions
While there are several advantages to a SEP plan, it is not perfect. Simplified Employee Pension plans do not allow for catch-up contributions.
So for employees age 50 and older that want to increase their contributions and focus on saving for retirement, they are not able to defer additional funds to their salary.
2. Employer-only contributions
Employees are not even allowed to contribute to the plan. This type of plan is only for employer contributions. This greatly impacts how much employees are able to save for retirement, relying solely on the employers' generosity.
3. No loans
Finally, SEP plans do not allow for loans from the retirement account.
4. No Roth Contributions
Finally, SEP plans do not allow for Roth contributions.
These plans can be rather rigid and only ideal for organizations in specific scenarios.
Is Your SEP Still Right For You?
As organizations start with a SEP plan, they may eventually outgrow the plan's advantages and want to transition to a new plan in order to update your organization's group benefits and provide a wider range of benefits to your employees.
Just because a company started with a plan, does not mean it will be the right plan for them forever.
Our SEP Plan Advisors
Langan Financial Group's SEP Plan Advisors have been working with SEP Plans for over 35 years.
We have an experienced, highly educated team that specializes in retirement plan programs.
In fact, one retirement plan advisor is a licensed attorney specializing in ERISA law, the law that governs retirement plan regulations.
While this individual does not practice law on behalf of Langan Financial Group, this perspective allows our team deeper insights into setting up and managing retirement plans for organizations.
Langan Financial Group will work with your organization to help ensure its SEP Plan is providing the best value to the business and employees it can. We will:
- Review the plan's design to ensure it aligns with your goals and needs
- Review the plan to ensure it is doing what it is supposed to be doing
- Benchmark the plan to help keep costs competitive
- Benchmark the plan to help keep the organization's liability low
- Engage the employees through financial seminars, one on one financial planning, and other methods to help them with retirement planning
Schedule a Chat with our SEP Plan Advisors
Langan Financial Group's SEP Plan advisors have over 100 years of experience servicing retirement plans for organizations.
Give us a call at 717-288-1880 to see how our local advisors can help with your retirement plans. Or visit our retirement plan advisor contact page to fill out an inquiry.
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Disclosure: Check the background of your financial professional on FINRA's BrokerCheck. The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Cambridge and Langan Financial Group, LLC. are not affiliated. Cambridge Investment Research Advisors, Inc. a Registered Investment Advisor. Securities offered through Registered Representatives of Cambridge Investment Research, Inc., a broker-dealer, member FINRA/SIPC, to residents of: AL, AZ, CO, DE, FL, GA, IA, KY, MD, NJ, NM, NY, NC, OH, PA, TX, VA, WI Cambridge and Langan Financial Group does not offer legal advice. Estate planning services are in regards to your overall financial plan. Always be sure to speak to a legal professional in regards to specific legal matters. Fixed insurance services offered through Langan Financial Group.
Testimonial/Endorsement Disclosure: The testimonials may not be representative of the experience of other customers. The testimonials are no guarantee of future performance or success. All of the testimonials/endorsements are clients with the exception of Steven Martinez of York SPCA. There was no cash nor non-cash compensation for any of the testimonials provided.
© Langan Financial Group
Harrisburg, PA Office
Address: 1863 Center St, Camp Hill, Pa 17011
Phone: 717-288-1880
York, PA Office
Address: 3405 Board Rd, Suite 200, York, Pa 17406
Phone: 717-773-4085
