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SEP - Switching Custodians


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We have a client who established a SEP with Schwab in 2007 using their protoype documents.

In 2016 they opened SEP IRA accounts with TDA and transferred all their Schwab dollars to TDA.  They also made a contribution in 2016 directly to the TDA accounts. They did not update the documents of the plan.

Is there a problem with using Schwab protoype documents, but opening and contributing directly to TDA accounts without re-stating the plan?

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The client is not using the Schwab SEP IRA prototype plan documents for the TD Ameritrade SEP-IRA account. If the entire balance was rolled out 10 years ago, i wouldn't be surprised if Schwab hasn't closed the account and effectively terminated the prototype plan.

TD Ameritrade has the SEP IRA plan sponsor complete the IRS Form 5305-SEP Contribution Agreement. This created a new SEP IRA plan  and has no relationship with the Schwab prototype plan or its document.

A Form 5305-SEP Contribution Agreement only amends/restates an earlier Form 5305-SEP. For example, if you had a pre-EGTRRA 5305-SEP.

Now if it was the other way around, you could/probably should select an amendment and restatement of a prior plan on the Schwab prototype SEP IRA adoption agreement.

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