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Sch C SEP for 401(k) participant


M Norton
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Physician works for hospital as W-2 employee and maxes out in the hospital 401(k); same physician also operates small clinic as Sch C using off-duty nurses (1099 workers) and has SE income from Sch C.  Can physician establish SEP for himself for SE income from Sch C?   if yes, do 1099 workers have to be included in SEP?  Is physician limited on SEP contribution due to participation in 401(k) at hospital?

Thanks!

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Yes, no and no. Depending on his level and history of SE income, a solo DBP may provide significantly more value, especially if he needs none of the SE income to live on.

Kenneth M. Prell, CEBS, ERPA

Vice President, BPAS Actuarial & Pension Services

kprell@bpas.com

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On 12/18/2018 at 10:42 AM, M Norton said:

Physician works for hospital as W-2 employee and maxes out in the hospital 401(k); same physician also operates small clinic as Sch C using off-duty nurses (1099 workers) and has SE income from Sch C.  Can physician establish SEP for himself for SE income from Sch C?   if yes, do 1099 workers have to be included in SEP?  Is physician limited on SEP contribution due to participation in 401(k) at hospital?

Thanks!

I agree with Kevin C. And add:

  • Yes- the physician can establish a SEP for himself based on SE income from Sch C
  • The  physician is not limited on SEP contribution due to participation in the 401(k) , because the two businesses are not part of a controlled group or affiliated service group ( I am assuming the physician has no ownership in the hospital. If that is not the case, please let us know.)
  • As Kevin C indicated, if the business has common-law employees, they must be covered under the SEP IRA, if they meet the eligibility requirements.

Life and Death Planning for Retirement Benefits by Natalie B. Choate
https://www.ataxplan.com/life-and-death-planning-for-retirement-benefits/

www.DeniseAppleby.com

 

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