Sarsep Checklist Worksheet
ADVERTISEMENT
1SARSEP CHECKLIST
SARSEP CHECKLIST
This checklist is not a complete description of all
For Business Owner’s Use
plan requirements, and should not be used as a
)
( D O N OT S E N D T H I S W O R K S H E E T TO T H E I R S
substitute for a complete plan review.
Every year it is important that you review the requirements for operating your Salary Reduction Simplified
Employee Pension (SARSEP) plan. Use this checklist to help you keep your plan in compliance with many of the
important rules. Click on "(More)" in any of the following questions for additional information (including examples)
on how to find, fix and avoid each mistake. See for online versions of the checklists, Fix-It Guides
and other resources for SARSEPs and other plan types.
1. Was your SARSEP established prior
6. Do 50% or more of all eligible
Yes No
Yes No
■ ■ ■ ■
■ ■ ■ ■
to January 1, 1997, and subsequently
employees make employee elective
amended for current law?
deferrals?
No new SARSEPs can be established after 1996, however, exist-
At least half of your eligible employees must make
employee elective deferrals to the SARSEP .
ing plans need to be updated for new law.
(More)
(More)
2. Do you have 25 or fewer eligible
7. Are total contributions (employee
Yes No
Yes No
■ ■ ■ ■
■ ■ ■ ■
employees?
elective deferrals and nonelective
Only businesses with 25 or fewer eligible employees
employer contributions) limited as
can contribute to a SARSEP .
required by the Internal Revenue Code?
(More)
For 2009 and 2010 contributions are limited to the lesser
of 25% of compensation or $49,000. SARSEPs do not permit
employers to make matching contributions to participants’
3. Are all eligible employees (those
Yes No
■ ■ ■ ■
accounts.
who are at least age 21, worked for you
(More)
in at least 3 of the last 5 years and have
received at least $550 during the year in
compensation) participating in the plan?
8. Did you deposit employee elective
Yes No
■ ■ ■ ■
Employees of other businesses you and/or your family members
deferrals timely?
own may have to be treated as employees when determining
Employee elective deferrals must be remitted to the appropri
who is an eligible employee under the SARSEP .
ate financial institution as soon as possible but, in any event,
(More)
no later than 15 days following the month in which the
employee would have otherwise received the money.
(More)
4. Are you determining each eligible
Yes No
■ ■ ■ ■
employee's compensation using the
definition in your SARSEP document?
9. Did you pass the annual deferral
Yes No
■ ■ ■ ■
percentage test?
A plan’s definition of compensation must satisfy applicable rules
for determining the amount of contributions.
The amount deferred each year by each highly compensated
(More)
employee as a percentage of pay (the deferral percentage)
cannot exceed 125% of the average deferral percentage of all
eligible nonhighly compensated employees.
5. Are all employee elective deferrals
Yes
No
(More)
■ ■
■ ■
within the appropriate limit as defined
under IRC §402(g) for the calendar year
($16,500 in 2009 and 2010) and have any
10. Have you made required top-heavy
Yes No
excess deferrals been distributed ?
■ ■ ■ ■
minimum contributions to the SARSEP?
Employees age 50 or over may also make additional catch-up con-
Refer to your plan document for information. Most plans are
tributions of up to $5,500 for 2009 or 2010.
deemed top-heavy, but some plans require annual testing.
(More)
(More)
If you answered “No” to any of the above questions,
you may have a mistake in the operation of
your SARSEP . This list is only a guide to a more compliant plan, so answering "Yes" to each question may not mean
your plan is 100% compliant. Many mistakes can be corrected easily, without penalty and without notifying the IRS.
contact your tax advisor
visit the IRS at
call the IRS at (877) 829-5500
■
■
■
Publication 4286 (Rev. 11-2009) Catalog Number 37998P Department of the Treasury Internal Revenue Service
ADVERTISEMENT
0 votes
Related Articles
Related forms
Related Categories
Parent category: Legal