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SEP-IRA contributions


strongsmurf

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My employer has been contributing to a personal SEP-IRA account for the past 5 (or more) years. After switching accountants they were informed that in order to contribute to a SEP-IRA you must contribute to all the employees that meet the required criteria. What rights do the employees have to go backwards and collect send SEP-IRA contributions?

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First, not knowing the situation, I'd say that you should tread carefully. Did your employer notify you of this? Is it privileged, confidential information?

Second, I'm not necessarily sure you have any "rights" as such. If the employer wishes to retain the qualified status of the plan, then "make-up" contributions plus lost earnings would be required for all eligible employees. But, the employer may choose to simply have the IRS disqualify the plan, if it is audited, and pay taxes, interest, penalties for all the deductions that will be disallowed. Hard to even guess without knowing how much money is at stake, employer's general attitude towards employees, etc., etc.

Some other folks here may have different opinions or more specific input. I don't know anything about potential state laws, express or implied employment contracts, or perhaps any of a host of other issues that an attorney might raise.

Good luck!

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Yeah, I'm not sure about it either! Certain provisions of ERISA don't apply, and some do, for example SEP-IRA's are exempt from parts 2 and 3 of Title I of ERISA, etc. - so I'm not sure offhand which ERISA rights might apply and which don't.

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If an employer with employees other than the owner(s) adopted a SEP plan document then it is an ERISA plan subject to a private right action and DOL enforcement under Part 5 of Title I of ERISA (as opposed to under state contract or employment law).

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