Integrated SEP - Compensation

[Guest JD Colville]

It has recently been brought to my attention that under certain very limited circumstances, an individual in a SEP can be allocated more than $24,000 (15% X $160,000) for 1999. Supposedly, this is because individual compensation for purposes of the 15% limitation is not subject to the 401(a)(17) limit of $160,000. My question is whether for purposes of the integrated allocation of the contribution, the individual's compensation is limited to $160,000 or whether the individual's total compensation can be used? If so, the allocation would be further skewed to the HC. I am assuming that all of the other requirements relating to SEP's, including the deduction limit of 15% of total compensation are met. Thanks in advance for any guidance.

[Bill Berke]

I strongly believe that the comp limit ($170,000 - 2000) applies. Read Code sections 408(k)(3)©, 408(K)(7)(B)and 401(a)(17). The rather convoluted way I got to this opinion.