contributions after death?
A client passed away in 2015, he was a schedule C, sole proprietor (unincorporated). The accountant wants to know if:
1) a contribution can be made on the deceased’s behalf
2) can his surviving wife put money in a SEP (either in her name or her husbands), to minimize the income tax bill.
OH! BTW no plan was in existence when he died
i already told the accountant there is nothing to be done, but i would never the less check
thank you
ben
Permalink Submitted by Alan - IRA critic on Fri, 2016-10-14 04:48
If a SEP had been opened by the decedent and there are other employees a fiduciary requirement exists to make contributions for all employees. However, there is no current SEP. If the surviving spouse inherited the business it might be possible for her to open a SEP IRA, however if an extension had not been filed in April, it is too late for her to make a 2015 contribution.
Permalink Submitted by David Laudeman on Fri, 2024-02-09 17:30
Taxpayer had a Schedule C and an existing SEP with no other employees. Taxpayer died in November 2023, can the spouse still make a contribution to the deceased husband’s SEP?
Permalink Submitted by Alan - IRA critic on Fri, 2024-02-09 22:40
Perhaps. While the IRS does not permit a post death contribution for a decedent, the business owner is treated as both the employer and the employee, and it appears that if the surviving spouse inherited the business and an existing SEP IRA, and if the SEP Custodian would accept a post death contribution, the IRS would probably allow it. Pub 560 states that the employer must make SEP contributions for employees that terminate or die during the year prior to a contribution being made.