Amend SEP Age Eligibility

Submitted by IRAQuestion5 on Tue, 2023-02-28 18:10

Hello-

Client set up a SEP IRA using 5305-SEP form saying that employees need to be 21 before receiving a contribution. They have an 18yr old son that works for them.

1. If they wanted to contribute to a SEP for that 18yr old son, do they just need to sign a new 5305-SEP and reduce the age?

2. The son worked for them in 2022. Can they do this retroactively so they can make a contribution for the son in 2022?

Thank you!



Submitted by Alan - IRA critic on Tue, 2023-02-28 20:13

The 5305 SEP should be amended in advance, not retroactively. 

Submitted by IRAQuestion5 on Tue, 2023-02-28 20:48

Okay, thank you. So if they update it now, they could do it for all of 2023. Or it the percentage contribution would just be for compensation earned after this point?

Submitted by Alan - IRA critic on Tue, 2023-02-28 21:29

Are there other non family employees on staff or might be added to staff in 2023 that would be affected by the desired change?

Submitted by IRAQuestion5 on Tue, 2023-02-28 21:42

No there are not.

Submitted by Alan - IRA critic on Tue, 2023-02-28 21:48

OK, client could change the 5305 effective 1/1/2023, but will have to adhere to it if any other employees are hired.

Submitted by IRAQuestion5 on Tue, 2023-02-28 22:13

Okay, thank you!

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