SEP plan sponsor
Self-employed taxpayer established and funded a SEP plan. The business is now a S-Corp, in which he is the slole-shareholder and only employee. Can he continue to contribute to the same SEP plan or must he establish a new plan under the S-Corp? If a new plan is required, can he rollover the old plan into the new plan?
Permalink Submitted by Alan - IRA critic on Wed, 2014-12-03 23:23
Taxpayer will have to submit a new 5305 SEP to the custodian, who may then require a new SEP IRA to be opened. If there are additional businesses under the S Corp, more employees may also need to be covered. IRA custodians may have different requirements regarding continuing the current SEP IRA in various situations. If a new SEP IRA is required, the old one can be rolled into the new one, but I would wait at least a year before doing that since a prior year contribution must be made into the correct account. Accounting will also be simpler if the entity change is effective Jan 1.