Simplified Employee Pension (sep)
Employee individual retirement account funded by an employer or a self-employed person. (Also known as SEP-IRA.) Differs from a pension plan in that contributions are immediately vested and employees have control of the investment of the SEP-IRA. IRS rules require that SEP-IRA contributions be made according to a written allocation formula. The maximum contribution is 15% of compensation or $30,000, whichever is less. Employees may elect to take cash instead of their SEP-IRA contribution but must pay income taxes on it. The tax reform act of 1986 also allows a SEP-IRA to be used as an alternative to a section 401 (k) plan (salary reduction plan) for an employer with 25 or fewer employees. The maximum annual contribution limit per employee for such salary-reduction SEP-IRAs is $7000.
Popular Insurance Terms
Excess funds above the amount required to establish legal reserves for the policies in force. These excess funds are generated as the result of mortality savings, excess interest earned on ...
Cash value of life insurance that accumulates according to a table in a policy. It reflects premiums in the early years that exceed the pure cost of protection during that period. If a ...
Legislation that raised taxes on life insurers and further defined life insurance. Because the tax equity and financial responsibility act of 1982 and 1983 (TEFRA) failed to raise the ...
Group whole life insurance policy designed to reduce an employee's exposure to income tax on the value of life insurance provided by the employer. The policy separates the term element from ...
Retirement plan under which benefits are fixed in advance by formula, and contributions vary. The defined benefit plan can be expressed in either of two ways: Fixed Dollars: Unit benefit ...
Premium that remains unchanged over time, regardless of any change in the nature of the risk. ...
Annuity that begins payments after a single premium is paid. For example, the annuitant pays a single premium of $100,000 on June 1 of the current year and begins receiving a monthly income ...
Insurance company that does not utilize the rates and policies of a rating bureau. ...
Coverage usually written as an endorsement to property policies such as the Standard Fire Policy. A loss must be by the intentional acts of vandals. This peril is of particular importance ...
Have a question or comment?
We're here to help.