Salary Reduction Simplified Employee Pension Plan - SARSEP

Salary Reduction Simplified Employee Pension Plan - SARSEP
A plan offered by small companies - typically those with fewer than 25 employees - that allows employees to make pretax contributions to their Individual Retirement Accounts (IRAs) through salary reduction.

Prior to the widespread use of 401(k)s, these plans were seen as a valuable benefit of employment, particularly for employees of small businesses. SARSEPs, as they have affectionately become known, were replaced by another plan (known as "SIMPLE") under the Small Business Job Protection Act of 1996. After 1996, existing plans were allowed to remain in existence, but no new plans were to be created.


Investment dictionary. . 2012.

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  • Salary Reduction Simplified Employee Pension Plan — ( SARSEP) A low cost, no frills version of a 401( k) employee savings plan available to companies with 25 or fewer employees. It allows employees to make pretax contributions to their IRAs through salary reduction each year. The Small Business… …   Financial and business terms

  • SARSEP — See: Salary Reduction Simplified Employee Pension Plan …   Financial and business terms

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