Simple IRA vs SEP IRA (Max Contrbutions)
Good day: A client has three companies, each with its retirement plan type. Two Simple IRAs and one SEP IRA. Can the account holder make the maximum contributions for each plan? Best, CS
- As Alan pointed out all these companies are a Controlled Group and treated as a single employer for employer retirement plan purposes.
- Also, as Alan pointed out there are one or more compliance errors.
- A SIMPLE IRA must be the only employer retirement plan for the calendar year. Any SEP IRA contributions would be non-compliant.
- If there are any non-owners/spouse employees. Anti-discrimination rules prevent the employer from disproportionately benefiting from contributions.
- There is on one annual addition limit across all businesses.
Permalink Submitted by Alan - IRA critic on Mon, 2023-06-26 19:36
The client, treated as single employer, must maintain only one type of plan, either a SIMPLE IRA or SEP IRA unless there are unique circumstances such as a recently acquired company. If the net earnings are low a SIMPLE IRA would probably allow higher contributions than the SEP, but a 401k would be higher than either. But this client may have current plan violations that need to be fixed soon.