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SEPs and Controlled Groups


Guest J_Cira_70
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Guest J_Cira_70

I have a situation where the wife is self-employed and maintains a SEP. Her husband owns a business with employees and has a qualified plan. Since this is a controlled group and she has to offer the SEP to the employees of his business (And, obviously has not), what is the easiest way to clean this up?

Thanks in advance for your help . . .

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  • 2 weeks later...

The wife is a potential participant in the qualified plan and the SEP needs to be adopted by both entities (otherwise none of the SEP contributions are permissible (assuming other employees or husband are eligible).

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If living in a community property state there are some possible exceptions that (if available) would eliminate the controlled group status between H & W. In general the H & W must agree that their businesses are separate property and there is no other cause for attribution (e.g., minor children). An ERISA attorney should be consulted because there are other non-pension issues that must be considered.

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