Search the Community

Hello. In April of this year(2019), I terminated my [single-owner] S-corp and the Solo 401k I had for it(filing final 5500ez, etc.). I rolled the Solo 401k funds into an existing IRA so I could terminate the 401k plan. I then moved from NY to FL and opened a new business, operating this time as a sole proprietorship. I contributed to the Solo 401k in Q1 before dissolving that business, but only $31.5k($19k employee deferral, $12.5k employer contribution)-- short of my limits for solo 401k or an SEP IRA otherwise. I planned on opening an SEP IRA starting in 2020, but now I'm finding I'd like to max deductions for 2019 more than I expected(I had more taxable events than planned), and was wondering if I could open an SEP IRA for the Sole Prop for the 2019 tax year? Vanguard says their interpretation is that I can't have two plans(401k and SEP IRA) in the same year, due to the same ownership/control of the two companies. When asked for them to point me to anything official to back up that position, they just vaguely pointed me to pub560-- but I can't find anything about multiple plans there, other than 5305-SEP requirements which shouldn't apply(as the 401k was terminated, and the 5305-SEP instructions specify 'presently maintain'; plus, that's just for using the form, not SEP IRA qualification itself). Is there anyone here that can answer this for me, pointing to some authoritative source? Thanks.

Good morning to all, I have been asked to post the following question from a CPA referral source: "Facts: Individual owns 100% of an S corporation. Only employees are husband and wife. They have a solo 401K plan. They both maxed their elective deferrals and the employer contributed max profit sharing. Husband also owns another business with no employees that is taxed as a sole proprietorship Sole proprietorship is profitable in 2018. Can they also do a SEP for the sole proprietorship?" I have no further information than what is shown in the inquiry. Thank you in advance to anyone who has had to address this before and knows what is permissible.

The plan sponsor has two plans, a money purchase plan & a 401K plan. The employee is a participant in both plans. Each plan allows for loans and the limit of each plan is one loan at a time. I understand that the $50,000 limit applies to both plans being treated as a single plan. Participant can only take a loan of $50,000 combined from both plans (not $50,000 from each of the two plans totaling $100,000). Since each plan only allows for one loan at a time, would both plans be treated as a single plan limiting the number of loans to one total from both plans?