SARSEP - Active Participation for IRA Purposes

[Guest Russell]

If an employer decides to limit his personal deferral amount into his company SarSep, or to NOT defer any monies at all for Top Heavy & ADP testing reasons, is he allowed to deposit after- tax monies into his traditional IRA?

Thanks for your response.

[Gary Lesser]

If elective contributions are made the individual is treated as an active participant for IRA contribution deduction purposes. If no elective (and no employer contributions were made) then the individual is generally not treated as an active participant. However, if the participant was not an active participant for last year because employer contributions were made after end of year (and no elective were made during year), then participant is treated as an active participant this year. Hope this helps.