Form 5305a-Sep - Salary Reduction Simplified Employee Pension - Individual Retirement Accounts Contribution Agreement Page 2

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Form 5305A-SEP (Rev. 6-2006)

Page

Article VI—Top-Heavy Requirements (continued)

The top-heavy requirements of section 416 will be satisfied through contributions to nonkey employees’ SEP-IRAs under this employer’s

other SEP.

C. To satisfy the minimum contribution requirement under section 416, all nonelective SEP contributions will be taken into account but elective

deferrals will not be taken into account.

Article VII—Effective Date (see instructions)

This SEP will be effective upon adoption and establishment of IRAs for all eligible employees.

Employer’s signature

Date

Name and title

Instructions

5305-SEP, Simplified Employee

SEP to that participant’s IRA by the later of

Pension—Individual Retirement Accounts

January 31 of the year following the year for

Section references are to the Internal Revenue

Contribution Agreement, or a nonmodel SEP

which a contribution is made or 30 days after

Code unless otherwise noted.

instead of, or in addition to, this form.

the contribution is made.

Employers who have established a salary

Do not use Form 5305A-SEP if you:

Purpose of Form

reduction SEP using Form 5305A-SEP and

1. Have any leased employees as defined in

have provided each participant a copy of the

Form 5305A-SEP is a model salary reduction

section 414(n)(2).

completed Form 5305A-SEP and the other

simplified employee pension (SEP) used by an

2. Currently maintain any other qualified

documents and disclosures described in

employer to permit employees to make

retirement plan. This does not prevent you

Instructions for the Employer and Instructions

elective deferrals to a SEP described in

from also maintaining a Model SEP (Form

for the Employee, are not required to file the

section 408(k).

5305-SEP) or other SEP to which either

annual information returns, Forms 5500 or

Do not file Form 5305A-SEP with the IRS.

elective or nonelective contributions are

5500-EZ, for the SEP. However, under Title I of

Instead, keep it with your records.

made.

the Employee Retirement Income Security Act

Note: SEPs permitting elective deferrals

3. Have more than 25 employees eligible to

of 1974 (ERISA), this relief from the annual

cannot be established after 1996. If you

participate in the SEP at any time during the

reporting requirements may not be available to

established a SEP before 1997 that permitted

prior calendar year. If you are a member of one

an employer who selects, recommends, or

elective deferrals, under current law you may

of the groups described in paragraph 2 under

influences its employees to choose IRAs into

continue to maintain such SEP for years after

Excess SEP Contributions—Deferral

which contributions will be made under the

1996.

Percentage Limitation on page 3, you may use

SEP, if those IRAs are subject to provisions

If you used the March 2002 version of

this SEP only if in the prior year there were

that impose any limits on a participant’s ability

Form 5305-A SEP for your SEP, you are not

never more than 25 employees eligible to

to withdraw funds (other than restrictions

required to use this version of the form.

participate in this SEP, in total, of all the

imposed by the Code that apply to all IRAs).

members of such groups, trades, or

For additional information on Title I

Instructions for the Employer

businesses. In addition, all eligible employees

requirements, see the Department of Labor

of all the members of such groups, trades, or

regulations at 29 CFR 2520.104-49.

What Is A SEP?

businesses must be eligible to make elective

Forms and Publications You May

A SEP is a written arrangement (a plan) that

deferrals to this SEP.

Use

provides you with an easy way to make

4. Are a state or local government or a

contributions towards your employees’

tax-exempt organization.

An employer may need to use any of the

retirement income. Under a salary reduction

following forms or publications:

SEP, employees may choose whether or not to

Completing the Agreement

● Form W-2, Wage and Tax Statement.

make elective deferrals to the SEP or to

This SEP agreement is considered adopted

● Form 5330, Return of Excise Taxes Related

receive the amounts in cash. If elective

when:

to Employee Benefit Plans. Employers who

deferrals are made, you contribute the

1. You have completed all blanks on the

are liable for the 10% tax on excess

amounts deferred by your employees directly

form.

contributions use this form to pay the excise

into a traditional individual retirement

tax.

arrangement (traditional IRA) set up by or for

2. You have given all eligible employees the

each employee with a bank, insurance

● Pub. 560, Retirement Plans for Small

following information:

company, or other qualified financial

Business (SEP, SIMPLE, and Qualified Plans).

a. A copy of Form 5305A-SEP. Any

institution. The traditional IRA, established by

● Pub. 590, Individual Retirement

individual who in the future becomes eligible

or for an employee, must be one for which the

to participate in this SEP must be given Form

Arrangements (IRAs).

IRS has issued a favorable opinion letter or a

5305A-SEP, upon becoming an eligible

Deducting Contributions

model traditional IRA published by the Service

employee.

as Form 5305, Traditional Individual

You may deduct, subject to any applicable

b. A statement that traditional IRAs other

Retirement Trust Account, or Form 5305-A,

limits, contributions made to a SEP. This SEP

than the traditional IRAs into which employer

Traditional Individual Retirement Custodial

is maintained on a calendar year basis, and

SEP contributions will be made may provide

Account. It cannot be a SIMPLE IRA (an IRA

different rates of return and different terms

contributions to the SEP are deductible for

designed to accept contributions made under

concerning, among other things, transfers and

your tax year with or within which the

a SIMPLE IRA Plan described in section

withdrawals of funds from the IRAs.

particular calendar year ends. See section

408(p)) or a Roth IRA. Adopting Form

404(h). Contributions made for a particular tax

c. A statement that, in addition to the

5305A-SEP does not establish an employer

year and contributed by the due date of your

information provided to an employee at the

IRA described in section 408(c).

income tax return, including extensions, are

time the employee becomes eligible to

The information provided below is intended

deemed made in that tax year and the

participate, the administrator of the SEP must

to help you understand and administer the

contributions are deductible if they would

furnish each participant within 30 days of the

elective deferral rules of your SEP.

otherwise be deductible had they actually

effective date of any amendment to the SEP, a

been contributed by the end of that tax year.

copy of the amendment and a written

When To Use Form 5305A-SEP

See Rev. Rul. 90-105, 1990-2 C.B. 69.

explanation of its effects.

Use this form only if you intend to permit

However, the deductibility of your

d. A statement that the administrator will

elective deferrals to a SEP. If you want to

contributions may be limited if the

give written notification to each participant of

establish a SEP to which nonelective employer

any employer contributions made under the

contributions may be made, use Form

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