SEP and PS Plan

[DP]

Doctor owns 50% of a C-corp and maxes out his PS contribution each year. This doctor also receives self-employment income unrelated to his medical practice.

Can he establish and fully fund a SEP based on his self-employment income?

[Guest mjb]

yes because there is no contolled group (Need more than 50% ownership). But why a sep when the Dr can establish a 401k with discretionary contributions to take advantage of deducting the first 15k in salary reduction (20k if 50) and an additional 29k in discretionary contributions?

[DP]

Thanks. Good point about the 401k. We're trying to get the SEP in place for 2005, but will establish a 401k early in 2006.

[ERISAnut]

I'd never venture to attempt a controlled group determination without first know who owns the other 50%. Many times I have encountered this question, it was the Doctor's wife. Just a thought.