S-Corporation 401-K and SEP Retirement Plan
Can an S-Corporation, with one employee (owner), have a Solo 401-K plan & a SEP plan and make contributions to both plans in the same year?
The employee contributed the maximum amount to the 401-K plan in 2024, as well as the maximum amount on the Employer side. The owner is still below the annual limit of contributions to their retirement plans ($69K).
At this point, would the same S-Corporation be able to set up an SEP retirement plan and make additional contributions (employer side) to the SEP plan up to the annual limit of $69K?
Permalink Submitted by Alan - IRA critic on Wed, 2025-02-19 14:38
“2. Can business owners contribute to a SEP IRA and a 401(k) in the same year?
Generally, no. If they maintain a 5305-SEP (the most common type), an employer cannot offer any other qualified plans. An employer offering either a prototype SEP or individual designed SEP can offer both types of plans in the same year. When both a SEP and a qualified plan can be maintained by the employer, there are additional considerations. If both a 401(k) plan and a SEP IRA are offered by the same business, business owners can contribute to both plans simultaneously, however contributions between the two plans are limited to the maximum of 25 percent of compensation or up to $69,000 (whichever is lesser).”
Above was copied from the Ascensus website.