SEP Contributions

[jane123]

Must an employer report SEP contributions to the IRS ( not salary deferral contributons).

How does the employer explain the discrepancy that arise when the custodian reports a SEP contribution received in 2003 for 2002 and is reported on the 5498 for 2002?

[Gary Lesser]

Other than claiming the generic deducton on Form 1040 if self-employed or having elective amounts reported in box 12 of Form W-2, there is no direct reporting by the employer. Under ERISA, the employer should, however, retain a copy of its notice of contribution to employees that is required if a model document is used. Or, if a nonmodel integrated SEP, if the special notice for integrated contributions.

There is no tracking of years. SEP contributions are properly reported in the year received by the trustee/custodian, rather than the year they are made on behalf of (i.e, claimed). Assuming these notice are not required for deduction purposes (of course meeting the rules of ERISA are important), amounts contributed after the end of the year may be claimed in either the current year or previous year. [To the extent that contributions may have to be "accrued," such rules may apply.] See, too, Rev Rul 76-28 (on point, but not necessarily applicable). Now, however, Prop. Treas Reg 1.408-9 requires a notice of contribution be given within a certain period after the end of the year (within 30 days, or by Jan 1) for all SEPs. Whether the IRS wd require this notice to have been provided to claim a deduction for a contribution made for example while under extension for a prior year is unknown. Nothing, that I remember, in IRC 404 seems to require a notice. Hope this helps.

Perhaps others can share some thoughts.