Hello-

Client owns a US based business and a foreign business. The US business has no employees but the foreign corporation does. I am trying to shift through the rules regarding controlled group, nonresident aliens, source income, etc. to see who needs to be covered by the SEP and not.

If the client makes a SEP IRA contribution for himself and later finds out he should have been making contributions for these other 100 employees, what corrective measures must be taken?

I am thinking of a nightmare scenario where the client has to contribute a make up contribution for these 100 employees. Is there instead a corrective measure that involves just undoing the client’s contribution?

The client’s contribution is small ($30K) and am wondering if it is worth the risk vs. just investing in an after-tax account.

Thank you!