Discussion:SEP Pension
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Discussion Forum Index --> Tax Questions --> SEP Pension
| 7 December 2005 | |
| I have an LLC that has an owner-member who owns 91% of LLC. It has been in business 5 years. There are 4 employees, none have been employed longer than 1 year.
LLC owner-member wants to start a SEP and contribute the maximum of $42,000 in 2005. He has enough income from the LLC to support this maximum payment. Since none of the employees has been there 3 out of 5 years, they will not get any contributions for their SEPs. Do I have a non-discrimination or Top-Heavy problem with the SEP? The owner will get a $42,000 contribution, none of the employees will get a contribution for 2005. Thanks for any feedback | |
| 8 December 2005 | |
| I do not think there is a Top Heavy rule with SEPs. If the employees qualify....you must contribute for them. If they do not qualify....better luck next year. | |
Matthewgaylor (talk|edits) said: | 8 December 2005 |
| There is an IRS Publication on requirements for different types of retirement plans, (Publication 3998 available at http://www.irs.gov/pub/irs-pdf/p3998.pdf) that provides good, quick & simple answers to how to qualify. Be sure the owner has form 5305-SEP (http://www.irs.gov/pub/irs-pdf/f5305sep.pdf) filled out in case of questions later on. | |
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