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.
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