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Terminating Keogh & Adopting SEP -IRA Same Cal Yr


Guest kprhok
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Guest kprhok

If I have a PS Keogh and wish to terminate the Keogh plan effective September 30, 2012, may I do so and on following day, October 1, establish an IRS Model SEP-IRA for use for the same calendar year 2012 as long as the 415 limits are not exceeded on an aggregate basis? If no contribution was ever made to the Keogh for 2012, can the SEP take into account compensation earned while the other plan was in operation?

As long as my termination date is prior to the effective date of the SEP-IRA (would this be the date the SEP form is signed?), it seems that I should be able to establish a SEP-IRA even if it applies to the same calendar year, as long as I establish the SEP-IRA after the official termination date of the Keogh plan.

Question 2. How do I establish the termination date for the Keogh for an unincorporated business - letter to the file, etc?

If there are any Reg citations available to support feedback, please share them. Thanks!!

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If I have a PS Keogh and wish to terminate the Keogh plan effective September 30, 2012, may I do so and on following day, October 1, establish an IRS Model SEP-IRA for use for the same calendar year 2012 as long as the 415 limits are not exceeded on an aggregate basis? If no contribution was ever made to the Keogh for 2012, can the SEP take into account compensation earned while the other plan was in operation?

As long as my termination date is prior to the effective date of the SEP-IRA (would this be the date the SEP form is signed?), it seems that I should be able to establish a SEP-IRA even if it applies to the same calendar year, as long as I establish the SEP-IRA after the official termination date of the Keogh plan.

Question 2. How do I establish the termination date for the Keogh for an unincorporated business - letter to the file, etc?

If there are any Reg citations available to support feedback, please share them. Thanks!!

There is nothing preventing you from having both plans in effect at the same time as long as you don't exceed the 415 limits.

William C. Presson, ERPA, QPA, QKA
bill.presson@gmail.com
C 205.994.4070
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Guest kprhok
If I have a PS Keogh and wish to terminate the Keogh plan effective September 30, 2012, may I do so and on following day, October 1, establish an IRS Model SEP-IRA for use for the same calendar year 2012 as long as the 415 limits are not exceeded on an aggregate basis? If no contribution was ever made to the Keogh for 2012, can the SEP take into account compensation earned while the other plan was in operation?

As long as my termination date is prior to the effective date of the SEP-IRA (would this be the date the SEP form is signed?), it seems that I should be able to establish a SEP-IRA even if it applies to the same calendar year, as long as I establish the SEP-IRA after the official termination date of the Keogh plan.

Question 2. How do I establish the termination date for the Keogh for an unincorporated business - letter to the file, etc?

If there are any Reg citations available to support feedback, please share them. Thanks!!

Form 5305 states "Do not Use this form if you, 1. Currently maintain any other qualified retirement plan." In a thread on this subject two years ago there was some discussion about how using a prototype vs. the model form would take care of that restriction. I am trying to determine that if I do use a model form, am I required to wait until the next calendar year to start the SEP, or can I establish it immediately after the termination date of the Keogh, as long as I don't violate 415.

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Just terminate the Keogh effectively immediately. You can then fully distribute the balance and roll over to an IRA. Prepare the zero balance Form 5500. You'd have until the extended tax filing deadline in order to establish and fund a SEP; you'd just use the SEP prototype to establish it.

Good Luck!

CPC, QPA, QKA, TGPC, ERPA

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Guest kprhok
Just terminate the Keogh effectively immediately. You can then fully distribute the balance and roll over to an IRA. Prepare the zero balance Form 5500. You'd have until the extended tax filing deadline in order to establish and fund a SEP; you'd just use the SEP prototype to establish it.

Good Luck!

Thank you!.

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Guest kprhok
Just terminate the Keogh effectively immediately. You can then fully distribute the balance and roll over to an IRA. Prepare the zero balance Form 5500. You'd have until the extended tax filing deadline in order to establish and fund a SEP; you'd just use the SEP prototype to establish it.

Good Luck!

Thank you!.

Oops, I just noticed you said "You'd just use the SEP Prototype to establish it". Do you mean the IRS Model Form 5305 Form vs prototype created by a financial institution, etc?

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  • 1 month later...

I am a little lost here so i hope someone can assist me.

I have a Keogh plan which i want to terminate soon (I am sole administrator and the only participant).

the assets are in a brokerage account:

1. what document , if any do i need tp file to terminate the plan?

2. my broker says i can transfer the assets to an exisitng IRA and that will be tax free. is that correct?

3. i believe i need to file a final Form 5500EZ. anyway i can do it myself as dont want to use the very high priced firm which did them for me until now.

thanks

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I am a little lost here so i hope someone can assist me.

I have a Keogh plan which i want to terminate soon (I am sole administrator and the only participant).

the assets are in a brokerage account:

1. what document , if any do i need tp file to terminate the plan?

Just an amendment to terminate the plan

2. my broker says i can transfer the assets to an exisitng IRA and that will be tax free. is that correct?

That is correct, after all mandatory distributions have been made (i.e. RMDs if you are age 70 1/2 or older.

3. i believe i need to file a final Form 5500EZ. anyway i can do it myself as dont want to use the very high priced firm which did them for me until now.

thanks

You can actually do it yourself.

Good Luck!

CPC, QPA, QKA, TGPC, ERPA

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  • 1 year later...

What is maintaining a qualified plan? And is that only a plan under 401(a)/(k)? Not a 403(b)?

I thought I had read something in the past that an employer could establish a SEP using the Model 5305 SEP provided no employee was receiving contributions to both plans in the same year.

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