sep excess
I have a client who made a 2022 SEP contribution to his account at a bank. We transferred the Sep funds to his traditional IRA. He informed us that his SEP was in excess and needs to remove it. Can we take the excess from his IRA or do the funds need to be transferred back to his SEP for the excess distribution Thanks….
Permalink Submitted by Alan - IRA critic on Mon, 2023-04-10 15:07
Are both accounts at the same custodian? Is the SEP on going, and is the amount of excess small enough so that the 2023 SEP contribution could be made early in an equal or slightly larger amount than the 2022 excess and then withdrawn as a return of the 2022 excess SEP contribution? This would also have to be done without creating a 2023 SEP excess. Otherwise, the excess would have to be returned from the traditional IRA. FInally, the 2022 return must either be filed by the due date for that return or a timely extension filed or the deadline for return of a 2022 excess will not be met.
Permalink Submitted by Jon Heller on Mon, 2023-04-10 15:38
The accounts are at two different custodians. I don’t know that he will have a contribution for this year SEP. It sound like I should transfer the excess from the traditional IRA to the SEP at the other institution and then make the excess distribution.
Permalink Submitted by Alan - IRA critic on Mon, 2023-04-10 16:09
OK, proceed that way.