2 SEP plans for same company

[Guest Scott Johnson]

Folks:

Am hoping for some feedback on this subject. Working with small company. Owner wants to keep his existing SEP plan and have the lone employee set up his own SEP. Each would remain within the limits provided by the plans. Also, no doubling up - just a plan for you and another plan for me.

Does this cause any particulars problems. And is illegal for any reason??

Many thanks.

Scott

[Gary Lesser]

Only an employer can establish a SEP. The employee is already covered by the existing SEP if they othrwise qualify, but must open an IRA to receive any contributions.

[Appleby]

Just so we are clear on how a SEP plan works.

Step one- the employer signs the appropriate SEP document to 'adopt' the SEP IRA

Step two- individual employees establish IRAs to which the employer will deposit contributions.

As long as the employer does not find it to be an administrative burden with he/she cannot cope, individual employees may establish their IRAs anywhere.

Some Custodians require the IRA to be designated a SEP IRA. Is this is the case, the individual employee must provide the custodian with a copy of the employer's SEP document, along with their IRA adoption agreement.

And like Gary said, only an employer may ESTABLISH a SEP IRA