participation in 2 SEP plans

[Guest Elizabeth Gaskins]

i have a client that has owns 50% of a c corp (a real estate company). the c corp has a sep plan. this 50% owner would like to establish a separate company that would be a sole proprietorship and he would be 100% owner (also a real estate company). can he establish a sep for the sole proprietorship? he would be the only participant but would also continue to participate in the c corp's sep plan. should i be concerned with affiliation or control group? can you participate in 2 sep plans?

thanks for any input.

[jaemmons]

I don't see why you wouldn't be able to participate in two seps, if the companies are not a controlled group. Unless there is a parent subsidiary relationship, you don't need to apply the Code 415(h) limits.

You need to take a closer look to see if the owner has a child under the age of 21, regardless of whether they are an employee or not. If they do, they may unfortunately become a controlled group because of stock attribution under Code Section 1563. Also, if the state where the two companies are "housed" is a community property state, the spouse, if not an employee within either company (assuming the shareholder/proprietor is married), may be attributed the owner's stock in BOTH companies due to the applicability of community property law within the state.