Part owner of business with Simple IRA & SEP for unrelated business
I want to make sure I am not missing something with the part ownership factor. Client is part owner of a company that has a Simple plan and is a participant in the plan. Now they wish to have a SEP with a completely unrelated business entity. I found some information from 2022 in this forum where it seems that assuming they are unrelated companies, the limits are not affected by contributions made to the other plan (and each plan can be treated as if the other does not exist). Does the fact that they are part owner change this?
Thank you!!!
Permalink Submitted by Alan - IRA critic on Wed, 2023-05-03 02:12
It might. The controlled group rules consider the details of ownership, the % ownership in each, type of entity and family attribution rules, ie the relationship to other owners.
Permalink Submitted by Amanda Minter on Wed, 2023-05-03 17:15
We are not completely understanding, and want to confirm:Client is a partner in a corporation that provides a Simple IRA.Client also has a side business that is an LLCDoes client need to talk w/accountant to determine control group issues, or what are next steps? If there are no employees in side business is it a non-issue for client to do a SEP?Any suggestions are greatly appreciated!
Permalink Submitted by Nicholas Sasser on Wed, 2023-05-03 17:43
I may be explaining this a little bit wrong. There is a partnership between two dentist, 50-50 ownership. Each dentist has their own corporation that has merged to form the partnership. The LLC partnership has the staff members, eight employees, from front office desk to hygienist to dental assistance that get paid through that partnership payroll and ithas a simple IRA set up just for those individuals. Each dentist in their own S Corp runs their own payroll and utilizes a simple IRA as well. The only other employees in the S Corp. are their individual spouses. One dentist wants to move to a 401(k) or sep IRA and the other dentist would like to be able to stay in his current investment style which is a simple IRA. Concerns and question: Can there be different investment plans or do they all have to be the same across the three entities of two S Corp.’s and the merged partnership. For example, if the eight employees and one partner want to utilize a 401(k) plan, can the other partner opt out and still continue his simple IRA plan? Or is his only option to join a 401(k) plan to contribute to retirement if we change?
Permalink Submitted by Nicholas Sasser on Wed, 2023-05-03 17:47
there is no side business. Just two dentists. Two s-corps that merged and formed a partnership which is the main practice. Hartnett and Sasser Dental LLC is the partnership and the two s-corp are BFD912 Inc. (partner 1) and JAHDDS Pc (partner 2)
Permalink Submitted by William Tuttle on Wed, 2023-05-03 18:06