The Jacobs Company
Employee Sponsored Plans
Salary Reduction SEPs (SAR-SEP)

Additional Considerations

A. Annual Deferral Limits: The maximum annual elective deferra lis $9,500 for 1996.'
B. Qualifications For A SAR-SEP

    1. At least 50% of eligible employees must elect to defer compensation;
    2. During the prior year the company must have employed 25 or fewer employees; and
    3. Each "highly compensated" employee cannot defer more than 1.25 times the average deferral
        percentage for all non-highly compensated employees who are eligible to participate.

C. Time Of Contribution: Employer contributions can be made until the due date (plus extensions) of the employer's  tax return.  Participant contributions must be made by December 31.

D. Vesting: Vesting must always be 100%.

E. Additional IRAs: Additional IRAs are permitted if the combination meets overall IRA limits.

F. Who May Participate: Any employee who is at least 21 years old and has performed "service" in at least three of the last five calendar years must be permitted to participate under the SEP unless his or her total compensation is less than $400' for the year.

G. Investment Of Plan Assets: Plan assets can be invested in most equity products or debt instruments but may not be invested in life insurance, "hard" assets or collectibles (except for U.S. gold and silver coins).  Participants direct the funds contributed on their behalf

1. Indexed for inflation in future years.

Advantages to Employer
Advantages to Employees
Disadvantages to Employer
Disadvantages to Employees


This document was last modified on July 27, 1999 by LMLeber

Copyright ©1999, The Jacobs Company, All Rights Reserved