• A simplified employee pension plan operates much like a 401(k) plan, in that the employee contributions can be made by deferred compensation and the employer can contribute. But the plan is attractive to small employers because it is much easier to administer than a 401(k) plan and gives the employer complete discretion on whether to make an annual contribution. IRC (26 USCA) § 408(k). — Abbr. SEP or SEP-IRA. [Cases: Pensions 28. C.J.S. Pensions and Retirement Plans and Benefits §§ 11–15.]
simplified employee pension plan
An arrangement under which an individual retirement account or annuity is established for each eligible employee and funded by discretionary employer contributions. IRC (26 USCA) § 408(k).