SEP continuation
Posted: 8-Jul-2019 2:05pm
S-Corp TP with 1 employee set up SEP years ago. However, for the past 10 years-ish has been contributing to a DB plan (now closed) so SEP has not been in use at all.
TP had several 1099 contractors. Corp attorney is recommending hiring all the 1099 contractors as employees because of some issues with CA law (which all makes sense so this isn't the issue).
We have no idea where the initial SEP documentation is - set up way before I started. Documentation would show either an instant entrance date all the way up to a 3 year entrance date for SEP. I would "think" instant would have applied since there was only the one shareholder employee for years, but obviously I don'k know. What happens now? Caution on the side or error? Is it ok to start all over again? And if it's ok to start all over again, then can we start the 3 year entry since the one shareholder has been employee forever? Are there exceptions to when contractors get converted to employees, such as their previous contractor time "counts" toward years worked?
Thanks for your help.
TP had several 1099 contractors. Corp attorney is recommending hiring all the 1099 contractors as employees because of some issues with CA law (which all makes sense so this isn't the issue).
We have no idea where the initial SEP documentation is - set up way before I started. Documentation would show either an instant entrance date all the way up to a 3 year entrance date for SEP. I would "think" instant would have applied since there was only the one shareholder employee for years, but obviously I don'k know. What happens now? Caution on the side or error? Is it ok to start all over again? And if it's ok to start all over again, then can we start the 3 year entry since the one shareholder has been employee forever? Are there exceptions to when contractors get converted to employees, such as their previous contractor time "counts" toward years worked?
Thanks for your help.