401k and SEP Contributions in the same tax year
Can a 401k and SEP contribution be made in the same tax year if the plans are offered by the same employer.
Can a 401k and SEP contribution be made in the same tax year if the plans are offered by the same employer.
Permalink Submitted by William Tuttle on Wed, 2022-04-13 20:07
A SEP IRA and a 401k can NOT be maintained for the same tax year. A SEP IRA is only maintained for the calendar year of the contribution. While a 401k is maintained from the date of adoption to the date of termination.
This employer has made serious plan errors in any year SEP IRA contributions were made after adopting the 401k.
These errors would need to be corrected under the IRS Employee Plans Compliance Resolution System (EPCRS). There is no statute of limitations on the filing of Form 5330.
This is not a DIY process. The employer needs to engage at a minimum a knowledgeable third party administrator (TPA) and maybe even an ERISA lawyer.