Marcus Wayne and Judity Caroline Ramsey - Page 5

                                         -5-                                          
               Discussion                                                             
               A Simplified Employee Pension (SEP) plan is described in               
          section 408(k).1  A SEP is a plan pursuant to which an employer             

               1    SEC. 408(k) states in pertinent part:                             
               (k) Simplified Employee Pension Defined.--                             
                    (1) In general.--For purposes of this title,                      
                    the term “simplified employee pension” means                      
                    an individual retirement account or                               
                    individual retirement annuity--                                   
                         (A) with respect to which the                                
                         requirements of paragraphs (2),                              
                         (3), (4), and (5) of this                                    
                         subsection are met, and                                      
                         (B) if such account or annuity is                            
                         part of a top-heavy plan, with                               
                         respect to which the requirements                            
                         of section 416(c)(2) are met.                                
                    (2) Participation requirements.--This                             
                    paragraph is satisfied with respect to a                          
                    simplified employee pension for a year only                       
                    if for such year the employer contributes to                      
                    the simplified employee pension of each                           
                    employee who--                                                    
                         (A) has attained age 21,                                     
                                                                                     
                         (B) has performed service for the                            
                         employer during at least 3 of the                            
                         immediately preceding 5 years, and                           
                         (C) received at least $300 in                                
                         compensation (within the meaning of                          
                         section 414(q)(7)) from the                                  
                         employer for the year.                                       
                       *     *     *     *     *     *     *                          
                    (3) Contributions may not discriminate in                         
                                                             (continued...)           





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