SEP IRA Custodian Question

SEP IRA Question

Have a tricky SEP IRA Question for everyone:

If an employee has a SEP IRA from a corporation of which they are the employer and the only employee then can they be the custodian? If not, would the financial institution managing the assets be the custodian?

If the SEP IRA did not have a custodian, then would the retirement account fail to qualify in the IRS’s eyes as a qualified retirement account?

Additionally we are unsure if a Form 5498 has been filed in previous years.

If the Form 5498 was not filed, would this cause the retirement account to fail to qualify as a retirement account in the IRS’s eyes.

Thank you for any and all input.



The employee cannot be the custodian, a financial institution would need to act as custodian for the IRA. The SEP plan would not exist without a Custodian and therefore not qualify as a retirement account. If 5498 Form’s were not filed it would not cause the retirement account to fail.  Follow us on twitter https://twitter.com/AdvantaIRATrust

All IRAs must be established with an approved IRA custodian who must file the 5498 according to IRS instructions. The employee cannot be their own custodian. It is not clear exactly what the IRS would do if no 5498 forms were filed for SEP contributions that were deducted on Form 1040. The first issue to be determined would be if there was a valid IRA account to begin with as that would be a larger problem than a 5498 omission. No 5498 form should result in an IRS inquiry eventually.

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