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SEP

A Simplified Employee Pension (SEP or SEP-IRA) is an employer funded retirement plan and is often used by self employed individuals to create a retirement nest egg for themselves. Contributions made into a SEP-IRA provide a tax deduction for the employer which is very beneficial if you are a self employed individual. The contributions are tax free to the employee and the account grows tax free until the money is withdrawn. Like an IRA and several other retirement plans, there is a 10% penalty in addition to the income tax if withdrawals are made before the individual reaches the age of 59 ½.

Upon dissolution of marriage or legal separation, a SEP-IRA is considered community property to the extent that it was funded during the marriage and subject to division. Like a regular IRA, a SEP-IRA does not require a formal qualified domestic relations order; however, a decree must identify the SEP-IRA with such specificity that the custodian of the IRA can recognize that the decree refers to the SEP-IRA that they are holding and managing. Most decree seldom have this information in sufficient detail and, therefore, requires that a clarifying order be entered in order to assure that the SEP-IRA can be divided. The Harrian Law Firm, P.L.C. is very experienced in drafting these Clarifying Orders and can assist you in drafting and processing the order.