K-t-F Posted March 29, 2012 Report Share Posted March 29, 2012 Simple question... here is the situation: The business is a partnership and there are 2 partners Partner A is a 60% partner Partner B is a 40% partner No other employees Partner A wants to make a contribution Partner B does not Can this happen? Its not easy being green Link to comment Share on other sites More sharing options...
Bill Presson Posted March 29, 2012 Report Share Posted March 29, 2012 Simple question... here is the situation:The business is a partnership and there are 2 partners Partner A is a 60% partner Partner B is a 40% partner No other employees Partner A wants to make a contribution Partner B does not Can this happen? No. William C. Presson, ERPA, QPA, QKAbill.presson@gmail.com C 205.994.4070Connect on LinkedIn Link to comment Share on other sites More sharing options...
K-t-F Posted March 29, 2012 Author Report Share Posted March 29, 2012 Can you expand a little? I am a DC man... my CPA is asking me this question and I want to explain why no. What I stated is all I know. Thanks Its not easy being green Link to comment Share on other sites More sharing options...
SheilaD Posted March 29, 2012 Report Share Posted March 29, 2012 Simple question... here is the situation:The business is a partnership and there are 2 partners Partner A is a 60% partner Partner B is a 40% partner No other employees Partner A wants to make a contribution Partner B does not Can this happen? Put in a DC plan where group A is greater than 50% owners and group B is other owners. The partnership (not the individuals) decides that Group A will get a 49,000 contribution and group B will get a 0 contribution. As long as no other employees I think this would work. Link to comment Share on other sites More sharing options...
rcline46 Posted March 29, 2012 Report Share Posted March 29, 2012 Refer the CPA to the document establishing the SEP - probably a 5305-SEP from the IRS. EVERYONE ELIGIBLE FOR THE PLAN MUST GET THE SAME CONTRIBUTION (I am ignoring the integration section). Since the CPA probably installed the SEP he should be familiar with the document. Link to comment Share on other sites More sharing options...
Bill Presson Posted March 29, 2012 Report Share Posted March 29, 2012 rcline46 and SheliaD are both right. PATA, they can't do what you outline in a SEP, because the rules don't allow it. They can certainly do what you outline in a DC plan exactly as SheilaD has proposed. They probably just don't want to pay for the document and admin. William C. Presson, ERPA, QPA, QKAbill.presson@gmail.com C 205.994.4070Connect on LinkedIn Link to comment Share on other sites More sharing options...
K-t-F Posted March 29, 2012 Author Report Share Posted March 29, 2012 They can certainly do what you outline in a DC plan exactly as SheilaD has proposed.They probably just don't want to pay for the document and admin. That is exactly right! But if SheilaD's idea works then maybe they would go for a DC plan after all. Thanks for all your help! Its not easy being green Link to comment Share on other sites More sharing options...
Belgarath Posted March 30, 2012 Report Share Posted March 30, 2012 Just be aware that the IRS could raise the "deemed CODA" issue. SheilaD addresses this when she tells you to have the partnership make the decision, rather than the individual partners. Lots of different opinions out there. Super-conservative opinion is not to allow a partner in a group by themselves. I'm sure if you do a search you'll find discussions on this issue. I don't think the IRS is currently on any witch hunt for this, but at the least you should consider it. Link to comment Share on other sites More sharing options...
Recommended Posts
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 accountSign in
Already have an account? Sign in here.
Sign In Now