Advanced Underwriting Consultants

Question of the Day – January 5

Ask the Experts!

The professionals at Advanced Underwriting Consultants (AUC) answer the tax questions posed by producers.  Here’s the question of the day.

Question: My client has a simplified employee pension (SEP) plan in place at his 100% owned company.  May the client also implement a defined benefit plan?

Answer: Probably not.

Most employers implement a SEP using IRS Model Form 5305-SEP.  That form specifically disallows the use of any other plan if the 5305-SEP is being used for the SEP.

A prototype or individually designed plan document is required if the employer wishes to combine a SEP with any other qualified plan other than another SEP.

Have a question for the professionals at AUC?  Feel welcome to submit it by email.  We may post your question and the answer as the question of the day.