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Comparison Table

Overview SEP IRAs SIMPLE IRAs SEP or SIMPLE Comparison FAQs
  SEP IRA SIMPLE IRA
Typical plan sponsors Self-employed, sole proprietors, partnerships and small businesses Small businesses with 100 or fewer employees and no other retirement plan
Key benefit Flexibility to contribute or not Easier to administer than a 401(k)
How it is funded Discretionary employer contributions Elective employee salary deferrals and mandatory employer contributions
Employee contribution limits (2013/2014 plan years) Not allowed Up to 100% of compensation to a maximum of $12,000 ($14,500 if age 50 or older)
Employer contribution limits (2013/2014 plan years) 0% to 25% of compensation to a maximum of $51,000 for 2013 and $52,000 for 2014 per employee (20% of net earnings for sole proprietors) Match participant deferrals up to 3% of compensation or make non-elective contributions of 2% of compensation to all eligible employees ($5,100 for 2013 and $5,200 for 2014)
Mandatory employer contributions No Yes
Flexibility to change employer contributions Yes, but each eligible employee must generally receive the same percentage Yes, may reduce matching contributions to as low as 1% in two of every five years1
Vesting Immediate Immediate
Annual tax filings None None
Employee eligibility requirements2 Can exclude certain non-resident aliens and employees who:

- Are under age 21

- Earn less than $550 annually

- Haven't worked for you in three of   the past five years

- Are covered under a collective   bargaining agreement
Can exclude certain non-resident aliens and employees who:

- Aren't expected to earn at least $5,000 in the current year and any two previous years

- Are covered under a collective bargaining agreement
Withdrawals Subject to federal income taxes; early withdrawals may incur 10% penalty Subject to federal income taxes; early withdrawals may incur 25% penalty in first two years and 10% thereafter
Deadline to contribute Employer's tax filing deadline, including filed extensions Employer: Tax filing deadline, including filed extensions

Employee: Payroll deductions

1. Employees must be notified more than 60 days before the calendar year when the reduction takes effect.

2. Requirements may be less restrictive to include more employees, if desired.

The information above is not intended to provide and should not be relied on for accounting, legal and tax advice or investment recommendations. The views and strategies described may not be suitable to all readers. Please contact your financial professional or tax advisor for additional information.

Asset allocation/diversification does not guarantee investment returns and does not eliminate the risk of loss.

IRS Circular 230 Disclosure: JPMorgan Chase & Co. and its affiliates do not provide tax advice. Accordingly, any discussion of U.S. tax matters contained herein (including any attachments) is not intended or written to be used, and cannot be used, in connection with the promotion, marketing or recommendation by anyone unaffiliated with JPMorgan Chase & Co. of any of the matters addressed herein or for the purpose of avoiding U.S. tax-related penalties.