Partners in a partnership and members of an LLC taxed as a partnership cannot have individual SEP IRAs (Simplified Employee Pension Individual Retirement Account) plans, according to the IRS.

Only employers are allowed to maintain SEP plans for their employees. Because partners are employees of the partnership for retirement plan purposes, they cannot have an individual SEP plan. If partners in a partnership wish to utilize a SEP plan, the partnership as an entity must maintain and contribute to the plan for the partners.

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of IRAs in Advisor’s Journal, see Qualified Charitable Distributions from an IRA (CC 11-03) & How Are IRA Owners Investing Their Money? (CC 11-112).

For in-depth analysis of SEPs, see Advisor’s Main Library: IRAs and SEPs.

Tags: 401(k), Business, Employment, Individual Retirement Account, Internal Revenue Service, Pension, SEP-IRA, SIMPLE IRA

 Email This Post
This entry was posted on Friday, July 15th, 2011 at 10:50 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.