Jump to content

SEP for a controlled group


Bird
 Share

Recommended Posts

Form 5305-SEP says you can't use it if the employer is part of a controlled group. Not that you can't have a SEP, just that you can't use the IRS form.

An investment company's adoption agreement has the definition of employer pasted below. Based on that language, it appears that if companies A and B are part of a controlled group, then either A or B could adopt the SEP and both can (must) participate in it. i.e if A adopts it, B doesn't have to do anything else to adopt the SEP other than make the contribution. All service with either company will count.

So...if the owner started company A in 2002 (with no other employess), and then started company B in 2004 (with employees) he can adopt a SEP for company A with 3 year eligibility this year, and contribute from A and B for himself only, of course at the same percentage and subject to 415 limits.

Any arguments against?

Employer. Any corporation, partnership or proprietorship that

adopts this SEP Plan, including any entity that succeeds the Employer

and adopts this SEP Plan. For purposes of this SEP Plan, Employer shall

also mean the Employer that adopts this SEP Plan and all members of a

controlled group of corporations (as defined in Code §414(b)), all commonly

controlled trades or businesses (as defined in Code §414©) and

all affiliated service groups (as defined in Code §414(m)) of which the

adopting Employer is a part. Employer shall also include any other entity

required to be aggregated with the Employer pursuant to Code §414(o).

Ed Snyder

Link to comment
Share on other sites

I don't quite agree with your interpretation of the 5305-SEP form language. What the 5305-SEP form says is that it may not be used by a CG/ASG UNLESS all eligible employees of all members participate in the SEP.

I agree that you can use 3 year eligibility to exclude those employees who do not have 3 years of service.

Link to comment
Share on other sites

I don't quite agree with your interpretation of the 5305-SEP form language. What the 5305-SEP form says is that it may not be used by a CG/ASG UNLESS all eligible employees of all members participate in the SEP.

Thanks. I re-read it and agree with you.

Ed Snyder

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...