Required SEP Contribution

Submitted by IRAQuestion5 on Wed, 2021-06-23 19:47

Hello-

An individual owns a company here in the United States that has a SEP plan set up (only employees are owner and owner’s minor son). They also own a company in Guatemala. There are several employees at the company in Guatemala but none are US citizens or residents. Are they required to make a SEP contribution for the employees on the Guatemala business?

Thank you!



Submitted by Nathan Kastner on Wed, 2021-06-23 21:13

Those guatemalan employees are not receiving a W-2, correct? As per the IRS a plan sponsor can exclude nonresident alien employees that do not have U.S. wages, salaries or other personal services compensation from the employer. In this case, the employees likely don’t even rise to the level of nonresident aliens.

Submitted by IRAQuestion5 on Thu, 2021-06-24 11:32

I am not sure if they are receiving a W2 but can find out.Does it matter where the business receives income from? For example if the only income the Guatemala business receives is a payment from the individual’s business here in the United States would that change the requirement? I was thinking if income was US sourced that could change things but not sure if that is applicable in this situation.

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