Author Topic: SEP  (Read 389 times)

freedom8991

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SEP
« on: December 23, 2018, 12:18:52 PM »
For the last four years I have had a SEP and was going to contribute to my SEP again.  However, my investment person told me that since I had an employee for about 4 months in 2018-I cannot contribute to a SEP.  Does that make sense to the wise ones in this group:) ?

Padonak

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Re: SEP
« Reply #1 on: December 23, 2018, 01:47:09 PM »
ptf

Kronsey

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Re: SEP
« Reply #2 on: December 23, 2018, 01:52:20 PM »
For the last four years I have had a SEP and was going to contribute to my SEP again.  However, my investment person told me that since I had an employee for about 4 months in 2018-I cannot contribute to a SEP.  Does that make sense to the wise ones in this group:) ?

You haven't provided enough details to answer completely, but your investment person is partly right. You can't contribute to an SEP for yourself without contributing the same percentage to your employee's account as well.


jpdx

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Re: SEP
« Reply #3 on: December 23, 2018, 03:55:32 PM »
When you opened your SEP, you should have filled out Form 5305-SEP or other formal document which outlines employee eligibility requirements. What does yours say?

Instructions provided on Form 5305-SEP: "An eligible employee is any employee who: (1) is at least 21 years old, and (2) has performed “service” for you in at least 3 of the immediately preceding 5 years. You can establish less restrictive eligibility requirements, but not more restrictive ones."

freedom8991

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Re: SEP
« Reply #4 on: December 23, 2018, 09:16:45 PM »
Thank you for the feedback. I had an employee from August -October 2018. During that time I did not open or contribute to a SEP. In prior years I did not have an employee. I simply contributed to a SEP. But I think because I had an employee in 2018 and did not open one for an employee I can now not contribute to one for myself. Is that correct?

jpdx

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Re: SEP
« Reply #5 on: December 24, 2018, 11:31:39 PM »
I don't think that is correct, for the reason I explained above. You can set the employee eligibility to be as high as 3 years -- since your employee only worked for four months, they are not yet eligible. That is my understanding although I am not an accountant, just a mere mortal. I highly recommend you look at Form 5305-SEP.