Nouri

Thank you, Lou S. for your response. This is my first-time posing here, and I am thrilled for your response. 1. DB calculation always looks for (among other things) the high 3-year consecutive average, according to my DB actuary person. In my case, the calculation is using 2011, 2012, and 2013. It will continue to use these three years for the life of the (DB) plan. So, my 0 (zero) W-2 for 2015 (and 2016 and likely 2017) does not matter. I understand that I cannot set up a SEP using the model IRS- SEP. I can, however, use other prototype plan to set up a SEP. This much I know. 3. The contribution for SEP (for S-corp) is based on W-2s. So, I was wondering, if I could consider myself not eligible for the SEP (because of no W-2 income). I know if I am a Schedule C filer, my entire business profit would be used for the calculation. If my thinking is correct, I was hoping that I can contribute only to my eligible employees based on their W-2s. 4. My actuary person has never worked with DB-SEP combo cases and is not sure the balance of the two.

Background: Have owned the same business since 1993. Have filed Schedule C until 2010, and formed/taxed as S corp since 2011. Established DB in 2013 and had 401K as well. Terminated the 401K (and rolled over to Traditional IRA) earlier 2016. The DB is the only retirement arrangement I (S-corp) have. I am the only eligible participant in the DB and have taken no w-2 income for 2015. I will continue to take no w-2 income from the business. I understand that I could set up a SEP (I had an old one that had been terminated several years back when I opened the 401K) using a prototype plan (from a mutual fund company) with ‘less restrictive’ rules (than 1000 hours of work per year), in addition to the DB I have since 2013. Questions: 1. Would I be considered eligible participant to the SEP even though I have no W-2 income for the business. How does this new SEP affect my DB, if any? 2. I am the only participant in the DB (due to the 1000 hours worked). Can my employee continue NOT to be eligible for DB while they may become eligible for the SEP? 3. The SEP Contribution amount is calculated based on the W-2. I (S-corp) will need to contribute for all eligible participants based on their W-2s. Since I receive no W-2 income, regardless of whether or not I am eligible for the SEP, my business (S-corp) will not contribute for me. Am I correct? Or, would my W-2 income be ignored, and the contribution will be calculated based on the entire business profit? 4. How can I research if I want to learn more about the SEP/DB for S-corp?