SEP IRA Formation when an employee refuses to participate
What recourse does an employer have who wants to set up a SEP but one employee refuses to participate. The employee says “he doesn’t want anything to do with it.”
The employer has three full-time employees all of whom qualify to participate. Employees are himself, his spouse and one additional employee. Can the employer still set up the plan and exclude the employee who refuses to participate?
Permalink Submitted by Alan - IRA critic on Wed, 2023-03-08 22:46
If the owners meet the 3 of last 5 year requirement, could that be used to exclude the employee?
Permalink Submitted by Mary Jean Wenzel on Thu, 2023-03-09 15:05
All employees meet the 3 of last 5 year requirement….the owners and the employee.
Permalink Submitted by Alan - IRA critic on Thu, 2023-03-09 15:59
Then employer should set up the SEP IRA for this employee and make SEP contributions to it. This would likely be done with the same custodian the employer uses.
Permalink Submitted by Mary Jean Wenzel on Thu, 2023-03-09 17:46
The employee has been told all that you list in the first bullet point. Whether he understands is another question.I will suggest to my client your second bullet point.Thanks for your responses.