SEP & SIMPLE IRAs
I have a client with a S-corp. with about 50-55 full time employees (12 salaried) and 200 hourly workers with less than 30 hrs/wk.
He is thinking about forming another S corp. with a 2nd TID # so that he can pay the salaried folks out of that separate corp. and offer them different insurance plans.
If he does this can he set up 2 different retirement plans as well?
Perhaps a SIMPLE for the salaried folks and a SEP for the others?
Does this somehow violate the “equal treatment” type rules which apply to SEP and SIMPLE plans?
Thank you in advance.
Permalink Submitted by Martin Helmer on Thu, 2008-05-15 17:53
Sounds like it can’t be done, assuming the new entity is part of a controlled or affiliated group with the first employer. See IRC 414(b) and 414(c) and 414(m), each of which tells you the rules apply to 408(k). 408(k) is the subsection dealing with SEPs.
Permalink Submitted by John Marold on Thu, 2008-05-15 17:56
Thanks for the help 😀