Santo Gold Posted December 16, 2004 Share Posted December 16, 2004 Mr. T is an employee of a large corporation and participates in their 401(k) plan. He is under age 50 and maxes out with the 401(k) contributions ($13,000 for 2004). Mr. T has also owned a small business for himself with 1 other employee. Financial Guy wanted to set up a retirement plan for Mr. T's small business, and accidently set up a SIMPLE rather than the intended SEP. Mr. T has had his first Elective Deferral withheld from his pay for the SIMPLE, when it was realized he had no room to put any elective deferral money into this plan (maxed out in the big company's 401k). Although withheld, the money has not yet been deposited anywhere. The other employee has not contributed anything. What are his options in this situation. For starters, can he keep the SIMPLE and not make elective deferrals, just use the ER contribution portion of it? What to do with his withheld money since it is not deposited yet. Is it OK to simply "reverse" that last paycheck of his to get the money back to him? Any other ideas? Thanks Link to comment Share on other sites More sharing options...
SoCalActuary Posted December 16, 2004 Share Posted December 16, 2004 I think you are still in time to fix this. Revoke the SIMPLE. Confirm that the 1 other employee was not intending to defer. Start the SEP. Fix the payroll record. Get it done by 12/31 or before the first payroll report. Link to comment Share on other sites More sharing options...
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