What type of business are you modeling? (Sole Proprietorship/Partnership or Corporation)

The way estimated contributions are calculated for a business owner who is eligible to participate in the plan is dictated by the way the sponsoring business is structured.

If the sponsoring business files its federal tax return as a sole proprietor or partnership (e.g., Schedule C, Schedule F or Form 1065), you should select "Sole Proprietorship/Partnership."

If the sponsoring business files its federal tax return as a corporate entity (e.g., Form 1120 or Form 1120- S), you should select "Corporation."

Note: If the sponsoring business is organized under state law as a limited liability corporation (LLC), the appropriate selection for this question will depend on whether the business files a federal return as a partnership (e.g., Form 1065) or as a corporation (e.g., Form 1120).

Does this business employ common-law employees? (Yes/No)

A common-law employee is a person who performs services for an employer who has the right to control and direct the results of the work and the way in which it is done.

For example, the employer:

• Provides the employee's tools, materials, and workplace; and
• Can fire the employee.

When establishing a business retirement plan, a business must take into consideration all common-law employees when assessing who must be covered under the plan. Generally speaking, the sponsoring business must provide retirement plan coverage for those common-law employees who meet the plan’s age and service requirements. While there are specific circumstances under federal law where a business may exclude certain classes of employees from plan participation, a business may not arbitrarily ignore common-law employees when determining who will be eligible for coverage under a business retirement plan.

If you own multiple businesses, you may be required to cover all employees of all owned businesses under this plan. Review controlled group rules with your tax advisor.

For what tax year would you like to do contribution/coverage modeling?

Select the applicable tax year for which you would like to model plan coverage/contributions. The actual deadline for making contributions will depend upon the sponsoring business's filing deadline and plan year end.

Age Requirement

When sponsoring a SEP plan, businesses may (but are not required to) impose a minimum age requirement (up to age 21, maximum) which individuals must meet to be eligible to participate in the retirement plan. Note that the minimum age requirement, if selected, applies to both business owners and common-law employees.

Service Requirement

When sponsoring a SEP plan, businesses may (but are not required to) impose a minimum service requirement which individuals must meet to be eligible to participate in the retirement plan. Note that a minimum service requirement, if selected, applies to both business owners and common-law employees. For SEP plans, an employer may require individuals to have worked for the business during up to three (3) of the immediately preceding five (5) years.

Business Owner Information

Last Initial: Enter the first initial of the business owner’s last name

Year of Birth: Enter the business owner’s year of birth (YYYY)

Year of Hire: Enter the first year in which the business owner worked for the sponsoring business (YYYY)

Estimated Self-Employment Earnings: Enter the business owner’s estimated net earnings from self-employment. Generally, net earnings are equal to the self-employed business owner’s gross income from the trade or business (provided the business owner’s personal services are a material income-producing factor) minus allowable business deductions. For purposes of this tool, the earnings entered here are presumed to be net earnings prior to any deductions for self-employment taxes and, if applicable, any deductions for retirement plan contributions made on behalf of common-law employees.

Other Compensation? Indicate whether the business owner will have taxable compensation during the applicable year from any sources other than the business for which retirement plan contribution modeling is being done.

This modeling tool includes calculations to estimate the self-employment taxes that will be payable on the business owner’s self-employment earnings entered in the “Estimated Self-Employment Earnings” field. In situations where the business owner has other taxable compensation for the given modeling year, the calculation assumptions incorporated within this modeling tool may not accurately reflect the business owner’s “compensation” for plan contribution modeling.

Employee Information

First Name: Enter the employee's first name

Last Initial: Enter the first initial of the employee’s last name

Year of Birth: Enter the employee’s year of birth (YYYY)

Year of Hire: Enter the first year in which the employee worked for the sponsoring business (YYYY)

Estimate of Covered Compensation: Enter the amount of “covered compensation” the employee earned (or is expected to earn) for the applicable year. While the specific definition of what constitutes covered compensation can vary from one plan to the next, most plans incorporate a definition of compensation that is closely tied to what is reported on employees’ Form W-2 (Wage and Tax Statement). For more information, employers should refer to the plan documents governing their retirement plan.