2 businesses, same ownership, one SEP/one SIMPLE?
I have a client with two businesses, both Scorps, same ownership and percentages in each. Can one biz maintain a SEP IRA while the other maintains a SIMPLE IRA? Can both businesses maintain a SIMPLE IRA?
Permalink Submitted by Alan Spross on Thu, 2011-03-24 00:26
You have entered into the complex area of controlled groups and affiliated service groups and I am not up to speed on them.
My impression however is that if the common ownership exceeds 80%, it is a controlled group and considered as one employer. A SIMPLE IRA cannot be maintained if there is another plan and therefore the SEP IRA effectively eliminates the SIMPLE IRA as an option for the other entity. But they could both offer the SIMPLE IRA only, subject to the SIMPLE IRA requirements and combined number of employees.
Again, just my impression and you should verify this with other sources.