SEP IRA Correction
Hello-
Client is a business owner with a SEP IRA. He has one full-time employee. In the past no review has been completed, to make sure the same percentage is going into each SEP. The client looked back the last few years and says it is close but last year was off by a few percentage points.
What are next steps? Is the client supposed to go back to the origin of the SEP and reconcile?
Thank you!
Permalink Submitted by Alan - IRA critic on Thu, 2022-01-13 20:03
Basically, yes. The client will need to make up the contribution shortfalls adjusted for earnings/losses. See p 48 of the following link:
RP-2021-30 (irs.gov)
Permalink Submitted by IRAQuestion5 on Thu, 2022-01-13 22:10
Thank you for your help! Is there any limit on the time period one must go back? It would apply to individuals that were once employees but are no longer as well correct?
Permalink Submitted by Alan - IRA critic on Thu, 2022-01-13 22:15
Yes, but their SEP accounts may have been closed, in which case a reasonable effort to contact them or determine if the former SEP custodian can help should suffice.