Why change a Money Purchase Plan to a SEP?

July 13, 2001

Subject:   Tax ?
Date:  Mon, 02 July 2001
From:  Ray

Michael,

Why do you think that clients that have a Money Purchase Program, will want to change their pension plan to a SEP.

Thanks,

Ray

Answer

Date:  Mon, 09 July 2001

Hello Ray,

Since the maximum profit sharing contribution is going up from 15% of compensation to 25% for 2002, some people may decide that's enough and they don't want to pay to maintain a separate money purchase pension plan.

However, since the overall limitation for defined contribution plans is increasing, some taxpayers may still find money purchase pension plans advantageous.

That's why I suggest consulting with a professional pension advisor when implementing changes under the new tax rules.

Good luck!
Mike Gray

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