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Deposits to wrong SEP


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A spouse with a small Schedule C has been deducting a SEP contribution on the joint Form 1040 for many years; the deduction ranges between 2,000 and 3,000 each year. The taxpayer informed us today that this contribution has, for the past many years, been made to his instead of to her SEP account.

The taxpayer is a partner in a partnership, and has large amounts of SE income, so the deduction is allowable each year based on the SE income on the 1040. The question becomes what needs to be done to move the contributions from the husband to wife's SEP, and what tax ramifications are there. The taxpayer asked the SEP custodian what to do and they deferred to the accounting firm who does the individual return, who then asked me (I am the TPA of the husband's company's 401(k) plan) for my opinion. This is one I haven't heard before.....

Any replies would be helpful, thanks!

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SEP's, in some ways, are not as forgiving as qualified plans. I haven't read the EPCRS Rev. Proc. with this particular issue in mind for a long time, but as I recall it requires a filing in this circumstance. Could be wrong.

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