Small Business Retirement Plans

A SEP IRA plan (Simplified Employee Pension Plan) is a low-cost retirement plan for small business owners and the self-employed. In a SEP, you set up an IRA for each eligible employee and make tax-deductible contributions into each account. Earnings are tax deferred.

Key features

  • No required IRS filings.
  • Each participating employee pays a $15 annual maintenance fee.
  • The deduction allowed for employer contributions can save your business money each year by reducing your tax liability.
  • You decide amount and frequency of contributions, and you're not required to contribute every year.
  • All contributions are 100% immediately vested.
  • Employees can create their own portfolios using any of our funds.

Who can establish

Sole proprietors, partnerships, S-corporations1, C-corporations1 and nonprofit groups. Consider an Invesco SEP Plan if you are a business owner or self-employed person who wants to:

  • Close the gap between Social Security income and retirement expenses.
  • Reduce tax bills.
  • Have a retirement plan that offers tax-deferred compounding of earnings.
  • Attract and retain valuable employees.

Eligible employees

You are only required to contribute for employees who:

  • Are 21 or older.
  • Have earned at least the minimum compensation amount for the current plan year.
  • Have worked for you for three of the last five years.

You may designate less restrictive requirements at your discretion.

Annual fees

$15 per account2, paid by the employee.

 

1S-corporations and C-corporations are two different types of legal structures, each of which is subject to different tax rules.

2$15 per account is drafted automatically unless otherwise instructed. Annual fee is waived for account balances of $50,000 or more.

This information does not constitute tax advice. Please consult your tax advisor about your particular situation.

 

SIMPLE stands for Savings Incentive Match Plan for Employees. It's a payroll deduction plan that permits an employee to make pretax salary deferral contributions in addition to the employer's contribution.

Key features

  • Inexpensive 401(k)-type plan for the small business owner.
  • No 401(k)-type discrimination testing.
  • Deductible employer contributions are made directly to employees' IRAs.
  • Employer has the flexibility to choose between two contribution options.
  • Employer contributions are mandatory.
  • All contributions must be 100% immediately vested.

Who can establish

Self-employed persons, partnerships, S-corporations1, C-corporations1, nonprofit, tax-exempt and governmental entities with 100 or fewer employees. Generally, the employer may not maintain another plan.

Annual fees

$15 per account2 includes 1099-R and 5498. Paid by the employee.

 

1S-corporations and C-corporations are two different types of legal structures, each of which is subject to different tax rules.

2$15 per account is drafted automatically unless otherwise instructed. Annual fee is waived for account balances of $50,000 or more.

This information does not constitute tax advice. Please consult your tax advisor about your particular situation.

The Invesco Solo 401(k) is a 401(k) plan for owner-only businesses — those with no employees other than the owner's spouse and no plans to add employees in the near future.

Key Features

  • Both salary deferrals and profit sharing contributions are discretionary — you do not have to make them each year.
  • Rollovers from other eligible plans, including traditional IRAs, are permitted — giving you an opportunity to consolidate your retirement assets.
  • Profit sharing contributions and traditional salary deferrals are tax deductible, and earnings accumulate on a tax-deferred basis. Keep in mind, however, that any withdrawals made prior to 59½ may be subject to tax penalties.
  • Loans are available.
  • Costs for an Invesco Solo 401(k) are substantially less than those of a standard 401(k).
  • Designated Roth contributions — called a Roth 401(k) — offer tax-free earnings growth for all investors and tax-free distributions for those 59½ or older or who meet the specified criteria.

Who can establish

Businesses with no employees other than the owners and their spouses. If you have employees or anticipate hiring employees in the near future, this plan isn't appropriate for you.

Rollover contributions

Rollovers from other eligible plans are permitted.

Vesting

You are 100% vested immediately.

Loans

Loans are available. Generally, you may borrow up to one-half of your vested account balance, but no more than $50,000.

Withdrawals

Distributions are limited to the terms of the plan. In-service withdrawals are available. Minimum distributions are required for owners 70½ or older. Distributions that are not qualified Roth distributions are subject to income tax in the year withdrawn and a 10% early withdrawal penalty if withdrawn prior to 59½.1

Deadline to establish

The plan must be established by the employer's tax year end.

  • The plan document must be signed and effective before contributions are made.
  • Only compensation earned after the adoption agreement is signed may be deferred.

Discrimination testing

401(k) discrimination (ADP) and top-heavy tests aren't required.

Government reporting

You may be required to file IRS Form 5500 annually.

As a result of the 2006 Pension Protection Act, for plan years after 2006, one-participant plans with total plan assets of $250,000 or less are exempt from filing Form 5500-EZ.

Trustee

You (the business owner) will serve as trustee of the plan.

Invesco Solo 401(k)® Self-Service

Self-Service

The self-service option doesn't offer administrative or compliance support. The owner is responsible for the administrative, compliance and reporting duties related to the plan.

 

1Withdrawals of designated Roth contributions are tax-free provided they are considered a qualified distribution where the account is held for at least five years and in the event of a participant's attainment of age 59½, death or disability. Nonqualified distributions will be taxed pro-rata; Therefore the basis (contributions) will be tax-free and any earnings will be subject to ordinary income tax plus a 10% premature distribution penalty (exceptions may apply).

This information does not constitute tax advice. Please consult your tax advisor about your particular situation.