SEP Accounts
I have clients who are business owners and have SEP accounts they are currently contributing and have recently hired a W2 employee.
Can the W2 employee open a SEP or do they now need to transition to SIMPLE IRAs or consider a 401k platform? And are there any resources for 401k platforms for three employees that is cost efficient?
Permalink Submitted by Alan - IRA critic on Tue, 2023-10-24 18:16
What are the eligibility requirements on the 5305 SEP form? The client must adhere to those requirements, which often require a long waiting period. But if there is no waiting period, the new employee must receive contributions right away. If they want to change to a SIMPLE IRA in the future, this should be done effective 1/1/2024. Normally, they would not consider a 401k unless they want to make higher contributions than they could with a SEP or SIMPLE IRA.