SEP's for S-Corps in 2012

[mgcpension]

Has anyone heard of SEP's not being allowed for S-corporations in 2012?

A tax client has told his tax preparer that they were told by American Funds that S-corps will not be able to make contributions to a SEP in 2012. We're not sure if our client misinterpreted the information they received from Am. Funds or if it was communicated properly. Also, supposedly a letter is being mailed by the end of July regarding this to all Am. Funds clients.

[ETA Consulting LLC]

Never heard of that one. Would want to know what is so special about an S-Corp (as opposed to a C-Corp, Sole Prop, Partnership, or tax-exempt) that they would not be eligible for SEP plan. It should make sense, and this just doesn't.

Good Luck!

[DMcGovern]

I didn't hear anything about S-Corps, but partners in a partnership cannot have individual SEP plans now

[Bill Presson]

partners in a partnership cannot have individual SEP plans now

Or ever...

[mbozek]

Has anyone heard of SEP's not being allowed for S-corporations in 2012?

A tax client has told his tax preparer that they were told by American Funds that S-corps will not be able to make contributions to a SEP in 2012. We're not sure if our client misinterpreted the information they received from Am. Funds or if it was communicated properly. Also, supposedly a letter is being mailed by the end of July regarding this to all Am. Funds clients.

At this point there have not been any changes to the tax code for retirement benefits that would take effect next year (other than minor provisions such as elimination of the charitable distributions from IRAs after 2011) although there are a lot of ideas floating around to reduce contributions to DC plans to raise revenue.

Of course the quick answer is to call American funds and see if they confirm the story.

[Bird]

I vaguely remember something passing my desk somewhat recently that was a reminder that partners can't have their own plans. Someone misinterpreted it, or something similar. Don't waste any time researching it.

[masteff]

Perhaps the client misunderstood some generic statement that you have until the S-corp's 2011 tax return is filed in 2012 to establish an SEP, which is just the deadline for every year's contributions.