SEP-IRA setup
Good afternoon,
Can an employer set up a SEP-IRA himself and employees and not make employer contributions to it? If so, can the employees make their own contributions to the accounts upto the IRA contribution limits? The employees are W-2.
I’m trying to determine if clients of mine have their accounts set up properly and that their contributions have been coded propery (everything has been coded as “employer contributions” previously). Current scenario is business owner has SEP registered under his tax id and employee son has his SEP registered under employer tax ID. Now they want to set up SEP for daughter but exclude the secretary.
thanks in advance,
Permalink Submitted by Alan Spross on Fri, 2011-07-29 18:27
Only the employer can make SEP IRA contributions and deduct them, although contributions are not mandatory. An employee can make traditional IRA contributions to a SEP IRA, but not SEP contributions and those are reported on the employee’s return and do not show as SEP contributions on Form 5498. The employe traditional IRA contribution may or may not be deductible.
The attached link indicates which employees can be excluded from SEP contributions in years where contributions are made for other employees.
http://www.retirementdictionary.com/definitions/simplifiedemployeepensio…