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I have a client who maintains a SEP Plan. They use to be invested at Smith Barney and therefore adopted their SEP Adoption Agreement. However, in the past year they moved to Merrill Lynch and ML does not maintain a SEP Document. Isn't it most likely true that the Smith Barney document probably doesn't satisfy the ML investing? I spoke with both SM and ML and they cannot give me any answers.

Do you think I should adopt the IRS Form 5305-SEP Document to be safe?

Any suggestions?

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Haven't seen the ML or SSB documents, but generally, the SEP Plan documents do not specify the investments. In the brokerage world the custodial and customer agreements/account application contain any investment limits/restrictions.

5305-SEP would be a good choice, it's portable, easy to maintain (pretty close to zero).

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I'm surprised that ML doesn't have their own document, but if that's the case I would imagine that if you went to them and said you wanted to start a SEP that the IRS version would be part of the kit. Anyway, I would adopt the IRS document.

The "any" service can be limited to those who earned at least $450. You can't be more restrictive.

Ed Snyder

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  • 1 month later...

Jilliandiz---Call Merril again. This time, ask to speak with someone in the retirement plans department- preferably a supervisor or manager . I am sure they offer a SEP and have their own document.

Any service is always ‘any service, however, short” for SEP IRAs. No modification allowed. If an employee worked I hour, he has performed one year of service. But as Bird indicated, he could be excluded based on the compensation, if compensation is less than $450.

As you may know, each SEP participant must complete an IRA adoption agreement to establish a traditional IRA to which their SEP contributions are deposited. It is this IRA adoption agreement that defines permissible investments and any restrictions/limitations

Life and Death Planning for Retirement Benefits by Natalie B. Choate



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Q1- Did employees transfer SB IRAs to ML? If so then IRAs wll be subject to ML investment rules for IRAs.

Q2- Did employer close out its account at SB? If employer stopped being a client of SB, SB will not maintain the SEP plan and the SEP deductions may be lost in future years if there is a change in the tax rules for SEPs unless employer adopts another SEP plan.


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