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Can owner of business also have a SEP for 1099 income?


AKconsult
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We are dealing with an individual who owns 100% of a business with employees. That business does not have a retirement plan. This individual also teaches for a totally unrelated entity on a part-time basis and he is paid for those services on a 1099. Is it possible for this person to set up a SEP and contribute to it with his 1099 income, without having to take into consideration the fact that he is also the owner of another business, and pulling in the control group rules? Thanks!

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He is paid for teaching on a 1099, that makes him a sole proprietor trade or business. He owns 100% of this sole proprietorship, so it is a CG with his other business which he owns 100%. So if he does a SEP for his teaching income he needs to cover the employees of the business as well.

If he were paid for teaching on a W-2, he would be an employee of that business that pays him. This would not be a CG with his own business, but he would not be eligible for a SEP because it is wage income, not his own business income.

I carry stuff uphill for others who get all the glory.

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