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Integrated SAR SEP PLan

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I have an integrated SAR SEP PLan.

THe owner and his employees do salary deferrals ( subject to the 1.25% test )

The owner then contributes 3% for himself and his employees. He is self employed and his income is capped at the $245,000.

( his actual Schedule C income is over $300,000 ).

Because the plan is integrated I am claculating his excess comp over the TWB at $138,200 ( 245,000 ,imus 106,800 ). If you multiply this by 2.7% you get an additional allocation for him of $3,631.

Does this make sense ?

Are there any on line calculators out there that can do this calculation ?

American Funds does not have one .

THank you,


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Your approach does work, but the excess percentage could be 3% (rather than 2.7%).

If the base percentage is 3%, then the excess percentage (disparity rate) is also 3% (the lesser of 5.7% or the base percentage).

If you are using the four step method, and only want to contribute an additional 2.7%, that's fine. It appears that STEP 2 (were everyone gets up to 3% of excess compensation) was not applied (before the 2.7% factor in STEP 3). The four STEP allocation method does not work backwards and is used for allocating a dollar amount among all participants.

For 2011, try allocating $11,496 (plus 3% on nonowner compensation).

QP-SEP Ilustrator Software may be useful in allocating contributions. http://www.benefitslink.com/GSL/index.html

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