Gudgergirl Posted February 21, 2014 Share Posted February 21, 2014 Client has SARSEP and allows employees to defer up to 25% of compensation and client makes annual employer contributions = 4% of compensation. Client has been determining all contributions based on gross wages. Client uses model IRS Form 5305A-SEP which to me seems to say the term "compensation" is w-2 wages excluding employer contributions and elective deferrals. Which means that for purposes of calculating employer contributions means that the 4% should be applied to the employee's wages less elective deferrals. Anyone have any thoughts? Link to comment Share on other sites More sharing options...
Gary Lesser Posted April 7, 2014 Share Posted April 7, 2014 SEP contributions should be made according to the SEP agreement (not the SARSEP agreement). It should be noted that compensation for top-heavy purposes must use unreduced compensation regardless of which document is being used. Consider using a prototype SEP/SARSEP plan document that generally gives the user an option. See, too, Publication 560, page 4, "Compensation." Link to comment Share on other sites More sharing options...
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