SEP – can one partner opt out?
For a qualified plan, maintained by an LLC, the LLCs members can elect to opt out of receiving a contribution – in certain circumstances pursuant to classification as highly compensated.
What if the LLC adopts a SEP plan? Can a contribution be made for one partner(LLC member) and not for the other partner? Ie can the partner opt out of SEP contribution?
Thanks,
Jim M
Permalink Submitted by Marvin Rotenberg on Mon, 2010-02-01 21:15
That is a interesting question. I know that the LLC rules are complicated and I don’t know the answer. If someone reading this does please feel free to jump in.
Marvin
Permalink Submitted by Martin Helmer on Tue, 2010-02-02 01:11
There’s no opting out. Section 408(k) states that one of the requirements for a SEP is that the employer will contribute to the account of each eligible employee.