Gentlemen:
One of my clients is a doctor who several years ago was contributing to a SEP IRA. The SEP IRA is at a brokerage house (brokerage house prototype plan) and contains mutual funds/REIT/and a few stocks. Client then opened up a Profit Sharing PLan and ceased contributing to the SEP. No additional contributions have been made to the SEP since opening the P/S Plan. The assets are 100% hers (no employees have any interest in the p SEP at this time).

Now the client is going to terminate the Profit Sharing Plan and roll the assets to the existing SEP IRA. Client has one employee who is covered by the P/S Plan and will be cashed out (given the choice of lump sum/rollover/etc.). The employee will continue to be employed by the client and subsequently will be under the SEP IRA. My client would like to keep her and her employee SEP accounts separate.

My question is this: It is allowable to set up a separate SEP IRA account for the employee, perhaps with a different custodian such as a mutual fund instead of the brokerage house, while the employer keeps her original SEP? Each year by accountant direction client would contribute one check to her SEP and one check to the employees SEP. Or must we go back and amend the original SEP to add an empoyee and keep all the assets with one custodian?

Robert Soscia
LPL Financial
[email protected]
(866)998-1314