sep elgibility
I have a client who is the managing member of an LLC, he receives a K-1 for his income. Can he make a contribution to a SEP
I have a client who is the managing member of an LLC, he receives a K-1 for his income. Can he make a contribution to a SEP
Permalink Submitted by Alan Spross on Mon, 2010-12-20 23:20
I can’t vouch for all of this, but the following should be helpful:
http://www.small-business-forum.com/showthread.php?t=25413
Permalink Submitted by Martin Helmer on Tue, 2010-12-21 01:00
The client’s plan must be be set up at the partnership level, with all eligible employees sharing in the employer’s contribution. In other words, an individual partner can’t set up his own plan. See for example IRC 408(k)(2).
Permalink Submitted by Jon Heller on Wed, 2010-12-22 18:48
The response gave me conflicting answers. The income is paid to the member, can he use this income to make a SEP contribution without the LLC establishing a SEP. The client has an existing SEP from previous self employment. Thanks
Permalink Submitted by Martin Helmer on Thu, 2010-12-23 21:24
No, he can’t use this income for setting up a SEP. See IRC section 408(k)(2).