Guest noans Posted April 10, 2014 Share Posted April 10, 2014 Here is the situation. Owner of LLC from Jan 2013 to current. NO employees. In September, 2013, purchased another LLC that has employees. Can the dr. make a SEP-IRA contribution under her single LLC for income earned BEFORE she also became owner of the LLC with employees? Based just on her January, 2013 to September, 2013 income. Since the type of work she is doing under her solo LLC and the one with the employees is the same and she is 100% owner of both, I would think that in future years she cannot make that deduction without being discriminatory. But for this split year and her income earned prior to owning other business is what I'm just not sure of Thank you!! Link to comment Share on other sites More sharing options...
Gary Lesser Posted April 10, 2014 Share Posted April 10, 2014 It wd appear that both businesses are controlled and all employees therefore treated as if employed by a single employer for 2013. Compensation from both entities must likely be considered for the plan. All eligible employees must participate. Hope this helps. Link to comment Share on other sites More sharing options...
Guest noans Posted April 11, 2014 Share Posted April 11, 2014 Thank you! Verification of what I thought. Accountant keeps insisting that she can take a deduction for the part of the year when she didn't own the LLC with the employees. Have a great day! Link to comment Share on other sites More sharing options...
Bird Posted April 11, 2014 Share Posted April 11, 2014 But if she was in business before Jan 1 2013 she can use an eligibility requirement calling for service in one (or more) prior years, and count all of her compensation, with no one else being eligible. Don't let a bad question give you a bad answer. Ed Snyder Link to comment Share on other sites More sharing options...
Guest noans Posted April 11, 2014 Share Posted April 11, 2014 Not sure if this fits the scenario. She was solo LLC prior to 2013 and continues with that solo practice. She purchased an existing LLC and is solo owner of that LLC as of Sept 2013. The purchased LLC has existing employees and an existing 401k plan with employees eligible for the plan and employer contributions. Then this also brings up...can she have the SEP IRA in same year that there is a 401k? There is 1 yr eligibility on the 401k so the dr isn't actually eligible in the 401k for 2013. The prior dr had already made 401k contributions into the plan. Thoughts? Link to comment Share on other sites More sharing options...
masteff Posted April 11, 2014 Share Posted April 11, 2014 If she is using a model 5305-SEP plan, that form clearly states that the employer cannot maintain both an SEP and another qualified plan (it could be done under a prototype plan but that's moot because of the control group rule). There is 1 yr eligibility on the 401k so the dr isn't actually eligible in the 401k for 2013. The control group rule also applies to 401(k) plans. Should talk to the people who administer the 401(k) (do they have an outside TPA?) to determine what options she might have there. Kurt Vonnegut: 'To be is to do'-Socrates 'To do is to be'-Jean-Paul Sartre 'Do be do be do'-Frank Sinatra Link to comment Share on other sites More sharing options...
Bird Posted April 11, 2014 Share Posted April 11, 2014 I would think that even though there is a controlled group, the differing eligibilities would allow for the SEP contribution, if she is using a prototype, which I think is the norm (and could be re-adopted now anyway). Ed Snyder Link to comment Share on other sites More sharing options...
Calavera Posted April 11, 2014 Share Posted April 11, 2014 Not sure but I think the transition rule of 410(b)(6)© may apply until end of 2014 year where both LLC do not need to recognize each other for the coverage purposes. Link to comment Share on other sites More sharing options...
Flyboyjohn Posted April 23, 2014 Share Posted April 23, 2014 To put a twist on this thread and being naturally suspicious of situations involving doctors I'd bet $10 that for the portion of the year that she was purportedly a solo practitioner with a SEP she was actually in an affiliated service group with the retiring doctors LLC that she purchased. I'd bet another $1 that they're dentists. Link to comment Share on other sites More sharing options...
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