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Who can sponsor a SIMPLE?


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Company A sponsors a SIMPLE-IRA.

Company A owns 51% of Company B. Owner A (no ownership in Company A) owns the rest of Company B (49%). Company B is an LLC.

Company B participates in Company A's SIMPLE

Owner A does not receive a W-2 from Company A or Company B, but does receive LLC payments that is declared as income.

Can Owner A participate in the SIMPLE-IRA without W-2 income?

If Owner A cannot participate in the SIMPLE and since no controlled group exists, can Company B start a separate plan (maybe a SIMPLE, maybe a 401(k)) that the owner can participate in?

If so, does Owner A have to wait until the current plan year ends (2013) before starting a new plan?

Thanks for any replies

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Is the definition of "employer" the same under IRC section 408 as under section 401? A SIMPLE is maintained by an employer. Once you get past that question and its implications, you might want to look at the defintion of employee under IRC section 408(p)(6) (B).

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