Zoey

Ok, let's put aside the fact that why would anyone WANT both a SEP and 401k Plan for a moment... I have a potential client who currently has a SEP plan. He is a sole proprietor. During 2009, he also became an S-Corp (so he will have both SE income and W-2 income) and now has one employee and wants to start a 401k Plan also (before the end of the year). (FYI - His SEP is a 5305 Model SEP.) I assume he can maintain both, but the million dollar question is, can he contribute to both the SEP and the 401k for 2009? I realize he will have a combined limit, but can it be done? Thanks so much for all of your help in advance.

Thank you. That's what I thought too.

Ok, let's say that the employer failed to suspend deferrals after a hardship in the current year. The participant took the hardship in February 2009. I was just notified that the employer has not suspended the employee's deferrals. What to do? I've notified the investment company that the money has to come back, but do you start the 6 month suspension now? Or now that it has been 6 months past the hardship, is the employee allowed to defer again? Thank you in advance for your response(s).