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Step 1
Notify the existing trustee of your IRA account that you work for a company that wishes to make SEP contributions. Technically, he will close the existing account and reopen the same account, noting that the account is eligible to receive employer funds.
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Step 2
Understand the rules of an SEP-IRA. Continue to make your own IRA contribution into the account if you wish. Note that the formula for SEP contributions allows the employer, rather than the employee, to take the deduction for the contribution. Employers deduct the amount of the contribution. In retirement, the SEP contribution is a taxable event.
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Step 3
Review SEP-IRA contribution rules and limits. You must be at least 21 years of age. You must have received at least $500 cash in payments. You must have worked for the employee for at least three of the last five years. Single-person companies cannot contribute more than 25 percent of their annual income to the SEP-IRA
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Step 4
Review the paperwork noting the change. Sign and date the new document that notes that your IRA account will also serve to receive employer IRA contributions under the rules governing an SEP-IRA. Once the account is open, make certain that you have documentation regarding the transfer of your account to SEP-IRA form.
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Step 5
Redeem at least 10 percent of the value of the SEP and for all other IRA accounts in your name at age 70 1/2 each year. Redemptions may not begin before age 59 1/2. Redemptions may affect income if you are receiving Social Security benefits at the same time.
