SEP eligibility requirement

[Zorro1k]

Client opened a SEP with bank in 2009. Client does not have original paperwork and claims to not have prepared SEP plan doc. She funded in 2009 - 2013 (in 09-10 based on schedule c, from 2011 on she incorporated and based contributions on w-2).

She hired an employee in 2014 who earned $65,000.

Files taxes on 1120s and is on extension.

Wants to fund for 2014 but wants to exclude employee.

Can client exclude the employee from the plan? If not, can client start a new and separate SEP for employees other than owner?

[Bill Presson]

Sign a new document.

[Bird]

Sign a new document.

Agree. You can't "start a new and separate SEP for employees other than owner" but can can use the "3 out of last 5" exclusion to keep the employee out.

[QDROphile]

Depends on the terms of the plan in effect in 2014. Were I in charge, I would presume no exclusion unless proven otherwise. Or maybe the SEP is invalid for failure to document if the liberal presumption does not save it. Pigs need to mind their Ps and curliques.