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Salary Reduction Simplified Employee Pension Plan (SARSEP)

Definition: [crh] A low-cost, no-frills version of a 401(k) employee savings plan available to companies with 25 or fewer employees. It allows employees toDefinition: make pretax contributions to their IRAs through salary reduction each year. The Small Business Job Protection Act of 1996 replaced SARDefinition: SEPs with SIMPLE (Savings Incentive Match Plan for Employees) plans. Existing SARSEPs were allowed to add new participantsDefinition: , but new plans could not be formed after December 31, 1996.

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