SEP IRA contribution question
We are establishing a SEP for a company before the tax filing deadline in 2019. The owner has 3 employees. One of the employees left in November of 2018 (the Sep is for the tax year 2018). Does the employer have to make a contribution to the individual that left the company in 2018?
Permalink Submitted by William Tuttle on Wed, 2019-03-20 23:24
They must receive the exact same contribution percentage on 100% of compensation up to the limit earned during the year.
Permalink Submitted by Michael S on Thu, 2019-03-21 16:41
I understand that… but I am establishing a SEP now. One of the employees is no longer employed with the company. Because the SEP is for 2018, is the owner responsible for opening an account – a sep – and contributing for the employee who is no longer employed? The employee left the job in November 2018.
Permalink Submitted by David Mertz on Thu, 2019-03-21 17:39
Yes, as long as that former employee has met the eligiblity requirements stated in the SEP plan, a SEP contribution must be made for that employee the same as for employees still with the company.