Guest jbc@edj Posted September 14, 2001 Report Share Posted September 14, 2001 Can an employer that has previously maintained a defined benefit plan establish a SEP IRA utilizing a prototype? Link to comment Share on other sites More sharing options...
Guest Taxwoman Posted September 15, 2001 Report Share Posted September 15, 2001 No. However, this rule does seem pointless since the 1.0 rule was repealed. The hope is that this will be addressed soon, but as it stands now, this stupid rules is still in effect Link to comment Share on other sites More sharing options...
Guest cascigm Posted September 17, 2001 Report Share Posted September 17, 2001 Are we saying that the employer could adopt the SEP and effectively any testing limitations would no longer have an effect? Or at this point in time regardless of when the company had a DB plan (ie. terminated one in the late 70's) they cannot adopt a SEP plan. Link to comment Share on other sites More sharing options...
Guest JPCMPLS Posted September 17, 2001 Report Share Posted September 17, 2001 What rule is it that says that a former DB sponsor may not adopt a prototype SEP? The 2000 version of form 5305A-SEP(post TRA 97), dropped the language about former DB sponsors not being eligible. Is there something in the Code, regs or other? I agree that it no longer makes any sense with the repeal of the 1.0 rule. Link to comment Share on other sites More sharing options...
Gary Lesser Posted September 18, 2001 Report Share Posted September 18, 2001 A SEP (model or prototype) may be used by an employer that does not currently maintains any other qualified retirement plan. Link to comment Share on other sites More sharing options...
Appleby Posted September 18, 2001 Report Share Posted September 18, 2001 Gary, You have a typo - I think you meant to say 'does', instead of "does not ". It is the 5305-SEP that cannot be used if the employer maintains any other plan. The SEP prototype can be paired with a money purchase pension or profit sharing plan. I do not agree. A model document MAY also be used in this instance. See below. (gsl) Life and Death Planning for Retirement Benefits by Natalie B. Choatehttps://www.ataxplan.com/life-and-death-planning-for-retirement-benefits/ www.DeniseAppleby.com Link to comment Share on other sites More sharing options...
Guest JPCMPLS Posted September 18, 2001 Report Share Posted September 18, 2001 I was not clear. My client terminated a defined benefit plan in 1989. In 1992 they adopted an individually designed SEP including 415(e) limitations. We believe that they should now be able to adopt the 5305A-SEP as the instructions no longer include the language about current or past sponsors of defined benefit plans not being eligible. Am I missing something? Link to comment Share on other sites More sharing options...
Gary Lesser Posted September 18, 2001 Report Share Posted September 18, 2001 Since the defined benefit plan was terminated, the model (or prototype) forms may be used to establish a SEP. Form 5305-SEP provides as follows. Note, the words "Currently maintain." When not to use Form 5305-SEP. Do not use this form if you: 1. Currently maintain any other qualified retirement plan. This does not prevent you from maintaining another SEP. 2. Have any eligible employees for whom IRAs have not been established. 3. Use the services of leased employees (described in section 414(n)). 4. Are a member of an affiliated service group (described in section 414(m)), a controlled group of corporations (described in section 414(B)), or trades or businesses under common control (described in sections 414© and 414(o)), unless all eligible employees of all the members of such groups, trades, or businesses participate in the SEP. 5. Will not pay the cost of the SEP contributions. Do not use Form 5305-SEP for a SEP that provides for elective employee contributions even if the contributions are made under a salary reduction agreement. ...... Link to comment Share on other sites More sharing options...
Appleby Posted September 18, 2001 Report Share Posted September 18, 2001 Gary, I guess we agree then- I should have added 'Model '. Life and Death Planning for Retirement Benefits by Natalie B. Choatehttps://www.ataxplan.com/life-and-death-planning-for-retirement-benefits/ www.DeniseAppleby.com Link to comment Share on other sites More sharing options...
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