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Participating in 2 SEPS


Guest Pat Metallic
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Guest Pat Metallic

An individual is a 50% partner in a partnership that sponsors a SEP. This individual also has unrelated self employment income from a business in which he is the sole employee and 100% owner. He would like to open a SEP for that side business. What are the concerns for that new SEP (i.e. are the combined contributions limited to the 415 limit)?

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Guest Pat Metallic
The contributions would have to aggregated only if the partner owns more than 50.00% of the partnership. See IRC 415(h) and 415(k)(4).

As a 50% owner and unrelated income of $70,000, could he use a uni-k and put away more contributions ($14,000, the 2005 402(g) limit)? Thanks.

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mjb, he would also need to check for attribution-right?

Pat- assuming no attribution , and assuming that his spouse ( if married) is not one of the partners in the partnership, he can out $14,00 + $4,000 if he is at least age 50 by 12/31/2005, plus 20% of his modified net profit from the SPship.

...let's wait for one of the experts on attributions to add comments. I am not an expert on attribution

Life and Death Planning for Retirement Benefits by Natalie B. Choate
https://www.ataxplan.com/life-and-death-planning-for-retirement-benefits/

www.DeniseAppleby.com

 

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I am not saying that there is-rather, I am asking if that aspect should be considered as well. It does not appear that we have enough information to determine that we can rule out the affiliated service rule...but I could be wrong. A-Orgs, B-Orgs and such is French to me- and I don’t speak French...When in doubt, I defer o the experts on the topic

Life and Death Planning for Retirement Benefits by Natalie B. Choate
https://www.ataxplan.com/life-and-death-planning-for-retirement-benefits/

www.DeniseAppleby.com

 

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Guest Pat Metallic
I am not saying that there is-rather, I am asking if that aspect should be considered as well. It does not appear that we have enough information to determine that we can rule out the affiliated service rule...but I could be wrong. A-Orgs, B-Orgs and such is French to me- and I don’t speak French...When in doubt, I defer o the experts on the topic

The spouse is not involved in either businesses.

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So, assuming just 50% ownership (i.e., no indirect ownership, and not part of an ASG), the entities appear to be separate entities for plan purposes and the 415 limits (when applicable) are applied separately to each plan.

I always like to ask who or what owns the remaining 50 percent. I always seem to get strange answers. ?? If 50/50 how are decisions made?

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