Control Group

[pixmax]

I have a client with a SEP Plan, husband and wife will defer max and want a PS to get to $49000.00, not over age 50. They also own another company 100% and want to offer a plan to their employees so they are setting up a 401k with the Basic Match. The owners will not participate in this plan. Do I have a coverage problem with theSEP Plan if they are not giving employees PS?

[Bird]

I have a client with a SEP Plan, husband and wife will defer max and want a PS to get to $49000.00, not over age 50. They also own another company 100% and want to offer a plan to their employees so they are setting up a 401k with the Basic Match. The owners will not participate in this plan. Do I have a coverage problem with the SEP Plan if they are not giving employees PS?

Yes. You may have a problem even if they are getting PS; read what the SEP says about controlled groups and whether you can use it at all or if it automatically covers all members of the CG. Also the first sentence about deferring and "want a PS" doesn't make sense to me.

[pixmax]

I have a client with a SEP Plan, husband and wife will defer max and want a PS to get to $49000.00, not over age 50. They also own another company 100% and want to offer a plan to their employees so they are setting up a 401k with the Basic Match. The owners will not participate in this plan. Do I have a coverage problem with the SEP Plan if they are not giving employees PS?

Yes. You may have a problem even if they are getting PS; read what the SEP says about controlled groups and whether you can use it at all or if it automatically covers all members of the CG. Also the first sentence about deferring and "want a PS" doesn't make sense to me.

PS Means they want to put in Profit Sharing to get to 49000.00

[Bird]

PS Means they want to put in Profit Sharing to get to 49000.00

But you said they will "defer max" - a SEP is not a deferral-type plan. And you said they wouldn't participate in the 401(k) plan which is where profit sharing contributions could go. If you meant they want to make the maximum employER contribution of $49,000 in the SEP, then I understand, but it's not a deferral and not profit sharing either in the true sense of the words.