Own Business with SIMPLE IRA, Options for additional self employment income

[Thomas Jefferson]

I own a LLC (taxed as S Corp) that offers a SIMPLE IRA to employees and myself.

I also have additional sole proprietary self-employment income from other activities(no employees, just me).  Can I setup a SEP IRA to put some of that income into a retirement account?

[Bri]

The problems are

(1) a SIMPLE can be a company's only retirement plan for the year (save for the new SECURE 2 language letting companies convert midyear specifically to a safe harbor 401k plan) so having a SEP for the same year would run afoul, and

(2) if you own both businesses, the IRS will look at the companies under common control as though they were one single employer for benefits testing.  In other words, just having a second plan (for the sole prop) would require you to consider the LLC's employees in terms of the overall who-can-get-what

 

[Thomas Jefferson]

So basically there's no way to have a separate retirement plan for the side business without offering the same thing to business 1 employees in addition to offering them the SIMPLE IRA?

[Thomas Jefferson]

One more note, we are still in the process if setting up the SIMPLE IRA right now so it could possibly be changed to a 401k, if that would change anything here.

[Georgegip]

I recently came across a situation where fees were being deducted from participant accounts in our retirement plan unintentionally. This raised a red flag for me as I began to wonder how common this issue is within other plans. Have any of you experienced something similar in your own plans? How did you address the issue and ensure that participants were properly reimbursed for any fees deducted in error? I would love to hear your thoughts and insights on this matter.