Instead of a 401K, client’s new company/employER is having its employees set up SEP IRA accounts so that the company/employER can fund the accounts (instead of a profit sharing plan, as an example). On the SEP IRA application, it says that the company/employER should fill out the company/employER information and “adopt” the SEP IRA agreement FBO of the employEE.

However, the company is saying that the employEE should set up the SEP IRA with employEE as the employER (e.g., like an independent contractor would), and the company would fund the SEP IRA thereafter.

I confirmed that the person will be receiving a W2, and not a 1099. Is what the company saying sound right?