SEP-IRA Controlled Group

[Guest adamor]

I have a SEP-IRA. I own 100% of company 1 and 50% of company 2. No other shareholders are family. Is this a controlled group? Can I take a 25%/$35,000 contribution to my SEP from company 2 without having to make equal contributions to my employees in company 1?

[Gary Lesser]

Although the employers may be part of an "affiliated service group," they are not part of a controlled group under Code Section 414(b) - since there is no control with just 50%. See ASG - IRC 414(m) and (o). If neither, company 2 can have its own plan.

Uness integrated, the maximum limit for 2004 is $41,000. Contributions may be based on the first $205,000 of compensation)