panther Posted October 6, 2015 Posted October 6, 2015 The Company sponsored a SEP with 2 participants. It turns out 1 participant provided no services to the Company and was ineligible to receive SEP contributions. Does that mean the other participant's SEP account could be disqualified?
Mike Preston Posted October 7, 2015 Posted October 7, 2015 No. It means that the ER contributions for the ineligible employee is treated as having received compensation and then made a voluntary IRA contribution. If the amount isn't within the personal IRA limits for that employee it is treated as any IRA contribution in excess of the limits.
panther Posted October 7, 2015 Author Posted October 7, 2015 Thanks. I assume you base that on the rule in Treas. Reg. 1.408-7(f). That is helpful.
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