Making SEP contributions for terminated employees
Posted 14 October 2004 - 01:05 PM
Posted 14 October 2004 - 01:38 PM
Posted 14 October 2004 - 02:28 PM
Posted 15 October 2004 - 07:40 AM
Posted 15 October 2004 - 09:42 AM
See (d) (2)
d) Participation requirements
(1) Age and service requirements. --This paragraph is satisfied with respect to a simplified employee pension arrangement for a calendar year only if for such year the employer contributes to the simplified employee pension on behalf of each individual who is an employee at any time during the calendar year who has --
(i) Attained age 25,
(ii) Performed service for the employer during at least 3 of the immediately preceding 5 calendar years, and
(iii) Received at least $200 compensation from the employer for the calendar year.
(2) Execution of documents. --The employer may execute any necessary documents on behalf of an employee who is entitled to a contribution to a simplified employee pension if the employee is unable or unwilling to execute such documents or the employer is unable to locate the employee.
(3) Required employment. --An employer may not require that an employee be employed as of a particular date in order to receive a contribution for a calendar year.
(4) Nonresident aliens and employees covered by collective-bargaining agreements. --An employer may exclude from participation in the simplified employee pension arrangement employees described in section 410(b)(2)(A) or 410(b)(2)©.
(5) Example. --The provisions of this paragraph may be illustrated by the following example:
Example. Corporation X maintains a simplified employee pension arrangement for its employees. Individual J worked for Corporation X while in graduate school in 1976, 1977, and 1978. J never worked more than 25 days in any particular year. In October of 1979, J began to work for Corporation X on a full-time basis. J earned $5,000 from Corporation X for 1979. J became 25 on December 31, 1979. Corporation X must make a contribution to a simplified employee pension maintained on behalf of J for 1979 because as of December 31, 1979, J had met the minimum age requirement of section 408(k)(2), had performed service for Corporation X in 3 of the 5 calendar years preceding 1979, and met the minimum compensation requirements of paragraph (d)(1)(iii).
Edited by Gary Lesser, 18 October 2004 - 01:36 PM.
Making the complex understandable.
Posted 20 October 2004 - 01:56 PM
Posted 20 October 2004 - 07:38 PM
Posted 09 December 2004 - 06:24 PM
In trying to establish custodial accounts on behalf of some of these employees, I find that the amounts of the contributions (two cases of being less than $100) are less than the custodians' minimums and the custodians can't make exceptions. Any suggestions about what to do in order to comply with the rules?
Posted 10 December 2004 - 01:37 AM
Posted 10 December 2004 - 07:59 AM
Personally, I felt like the whole thing was a sham cooked up between the employee and the employer, because I'd think that most employers would fire an employee who did this. But maybe it wasn't faked. I always wondered what the IRS would do if they happened to check this out.
Posted 12 December 2004 - 10:34 AM
So, if the IRA could have been established on a deductible basis, I imagine that the employee would have accepted the contribution as a "gift from G^d!
Posted 12 December 2004 - 06:06 PM
Posted 14 December 2004 - 08:52 PM
Posted 20 January 2005 - 05:47 PM
Edited by gbandy, 21 January 2005 - 10:54 AM.
Posted 24 January 2005 - 10:28 PM
Be sure the employer/trustee has your current address for notices (and so on).
Hope this helps.
Posted 25 January 2005 - 04:53 PM