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SARSEP-Coordination with 401(k) Plan


Guest ANNEBV
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Guest ANNEBV

Due to my very limited experience with SARSEPS, am looking for some guidance on potential issues to address with my situation, of which I don't have a lot of details, unfortunately.

Client has existing SARSEP. Implemented 401(k) Plan in July, 1998. SARSEP has not been terminated. Should it be? Can it be?

Presumably, client has suspended deferrals to SARSEP in lieu of 401(k) Plan as of July, 1998. What if they didn't? Ramifications?

I don't know why you would want to, but if you could, can you maintain a SARSEP & a 401(k) simulataneously?

Please pardon the perceived ignorance of my questions. I am trying to be painfully basic, and almost clueless, to make sure I gather all possible info from someone with SARSEP expertise.

Thanks to whoever can help!

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If using IRS model documents a QP may not be maintained for the same year (thus, it could be argued that all contributions are excesses in the IRA and the employer sd treat them as wages for all purposes (including allocations under the PS plan!). Under a prototype plan the SARSEP contributuons reduce the otherwise allowable profit-sharing contribution. Hope this helps you. Is it possible that a new tax year began on July 1. If using a prototype it is unclear whether the employer is giving up the SARSEP permanently or temporarily.

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If an calendar year employer sponsors a prototype SARSEP, can a Safe-Harbor 401(k) be set during the calendar year using the argument that the Safe-Harbor is a new plan?

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