Can a small business have 2 SEP Ira accounts?

[Guest confusedbusiness]

I have recently learned that if I amend my eligibly of my SEP from a 2 year to a 3 year, any employees that now qualify in the 2 year eligibility will be grand fathered in.

I plan on giving my employees a nice bonus at the end of the year, and would prefer not to be forced to contribute to them via the SEP. So instead of amending the SEP, can I just create a second SEP? I did find research from the IRS and other sources that a business can have multiple SEP accounts.

IE: One with Schwab and one with Fidelity for example. <-- I assume both are prototype SEP agreements

Is the SEP agreement specific to each broker? If so, it would make sense that each SEP account will carry its own eligibility agreement.

Then I am guessing, I can decide which SEP account to fund at the end of the year. So for my favor, this year I will fund the Fidelity SEP with a 3 year eligibility and not fund the Schwab SEP with only a 2 year eligibility.

Does this seem correct? Please help.

And finally, if the above does not work? Can I terminate my Schwab 2 year eligibility SEP IRA and start a new Fidelity 3 year eligibility SEP IRA. I would think that each plan is independent of each other. If I am not happy with the Schwab SEP IRA, why not cancel and start over?

[Guest Sieve]

You can have a second SEP--even if you use the IRS's SEP Form (a surprise to me, but the Form 5305-SEP Instructions are clear).

However, I disagree with the advice you were given: that changing participation to 3- out-of-5 years from 2-out-of-5 years grandfathers in the 2-year participants. Even in qualified plans, eligibility is not a grandfathered provision, and therefore can be lengthened and thereby cause some current participants to lose their status as participants.

[Bird]

However, I disagree with the advice you were given: that changing participation to 3- out-of-5 years from 2-out-of-5 years grandfathers in the 2-year participants. Even in qualified plans, eligibility is not a grandfathered provision, and therefore can be lengthened and thereby cause some current participants to lose their status as participants.

That's right. In other words, you can keep your same SEP plan/account(s) and just change the eligibility.

[Guest Sieve]

. . . making sure, of course, that the amended SEP does not contain some boilerplate language that would grandfather in all those who are participants on the effective date of the amendment. That language would have to be omitted if you want the new, longer eligibility provisions to impact everyone.