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K. Hutcherson

SEP Contribution in year of business closure

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I have a doctor who is a PC and they closed down their business in September 2019.  The last paychecks went out to employees in September.  The doctor wants to do a SEP contribution for himself in 2019 -- the PC has not been dissolved yet, but employees have rolled or taken distributions from their respective SEP accounts.  Would the client still be obligated to pay the former employees a SEP contribution for 2019 if he takes one for himself?

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Once the money goes in the SEP accounts, they belong to the participant and what they do with the money has nothing to do with whether they are eligible to get a contribution this year. Just apply the eligibility requirements and make the contributions.

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6 hours ago, K. Hutcherson said:

I have a doctor who is a PC and they closed down their business in September 2019.  The last paychecks went out to employees in September.  The doctor wants to do a SEP contribution for himself in 2019 -- the PC has not been dissolved yet, but employees have rolled or taken distributions from their respective SEP accounts. 

Doesn't matter if the employees have take the funds out or not.

Would the client still be obligated to pay the former employees a SEP contribution for 2019 if he takes one for himself?

You betcha!

 

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