SEP contribution after death of sole proprietor?

[Craig Garner]

For the year in which a sole proprietor dies, can the surviving spouse and/or executor of the estate step in and make a SEP contribution on behalf of the deceased owner/participant based on earned income for that year? I think the answer is yes, because the SEP is an employer-sponsored plan, and the spouse/executor is acting to wind down the business, which may include making SEP contributions.

I also have the same question regarding a SIMPLE Plan. Here, I think the answer is no, since the election to defer would have to be made by the owner/participant, and not by a third-party.

[Lou S.]

I agree. I see no reason why an employer can't be made on behalf of a deceased participant unless the plan terms prohibit it which a SEP would not.

I also agree that a deceases person could not make an election to defer, however if they had an election to defer a percentage of Sch C income or dollar amount conditioned on having sufficient Sch C income to support it I could see the surviving spouse honoring the election and making the deferral.