SEP IRAs

A Simplified Employer Plan (SEP) is a retirement account established by your employer. An employer may consist of a sole business owner, a partnership or a corporation.

  • The employer is allowed to deduct a percentage of the participant's compensation.
  • SEP contributions are deductible by the employer and are not included in the employee's income for the year.
  • SEP contributions are not subject to Federal withholding, FICA or FUTA taxes, unless you are self-employed.
  • Interest earned on the SEP deposit is sheltered from federal and most state income taxes until withdrawals are made at retirement.

A SEP is an arrangement through which employers can make contributions toward their employees' retirement income, including their own IRA. SEP's permit larger contributions than regular IRA's.

A Shelby County State Bank IRA Specialist can give you more specific details on SEPs.


Simple IRAs

  • Employee-sponsored retirement plan.
  • Employer is eligible if it employs 100 or fewer employees.
  • Employee, by making elective deferrals, can defer current income taxation.
  • A person can contribute up to $7000 (if younger than age 50) or $7500 (if age 50 or older) through a salary-reduction contribution.
  • An employer is allowed to deduct the cost of these elective deferrals.
  • Interest earned on SIMPLE deferrals is sheltered from federal and most state income taxes until withdrawn.

A Saving Incentive Match Plan for Employees of Small Employers (SIMPLE IRA) is an employer-sponsored retirement plan. To be eligible to have a SIMPLE, you must employ 100 or fewer employees and you, the employer, cannot currently maintain another qualified plan.

A sole proprietor may establish a SIMPLE provided he meets certain requirements. This product allows an employee/participant to contribute funds from his or her own payroll and the employer can match the contribution up to a certain percentage of the employee's compensation.

Limits exist as to how much the employer may contribute (i.e. electively defer) and there are limits as to the matching contribution the employer must make.

An employee may elect to defer an amount not to exceed the amount set forth in the following chart:

Tax Year Younger than age 50 Age 50 or older
2013 $12,000* $14,500*

*Annual cost-of-living adjustments (COLA) determines the deferral limit.

An employee is not eligible to defer more than this chart indicates or more than his or her compensation.

Contributions to a SIMPLE are excludable from the gross income of the employee.

The employer will be able to deduct both its elective deferral contributions and its matching contributions.

For more details, speak to one of our IRA Specialists.

IRA Disclosure

Disclosure for INDIVIDUAL RETIREMENT ACCOUNTS and COVERDELL EDUCATION SAVINGS Variable Rate Accounts

The daily balance method will be used to calculate interest on your Individual Retirement Account (IRA) or your Coverdell Education Savings Account (ESA) by applying a daily periodic rate to the full amount of principal in the account each day.

DEPOSIT INFORMATION

A minimum deposit of $500 is required to open a traditional IRA or a Roth IRA account. A minimum of $100 is required to open a Coverdell Education Savings Account (formerly called the Education IRA).

Deposits of any amount may be made to the account after it is opened. However, you will be liable for any penalty incurred for excess contributions to your Traditional IRA, Roth IRA or Coverdell Education Savings Account.

INTEREST RATE

The interest rate and annual percentage yield you will earn is variable and is set at the discretion of the management of the Shelby County State Bank. The rate may change monthly. To obtain the annual percentage yield disclosed, you must maintain a minimum balance of $50 in the account each day.Interest is compounded quarterly and the interest you earn is credited to your account at the end of each quarter. Interest begins to accrue no later than the business day of deposit. Deposits received before closing on a business day are credited on that day. A Shelby County State Bank rate sheet is available disclosing current rates.

WITHDRAWALS

Withdrawals are limited by law. Please see your tax advisor for details. You have the right to withdraw your deposit plus any interest at any time, though you may be subject to certain penalties.

We reserve the right to require seven days notice before any withdrawal can be made from an interest-bearing account.

PLEASE ASK A BANK REPRESENTATIVE FOR CURRENT RATES