SEP IRA for multiple businesses

Technical topics regarding tax preparation.
#1
mikrev  
Posts:
41
Joined:
13-May-2015 10:08pm
Location:
Southern California
My client owns a sole proprietor and an LLC with his wife. He opened a SEP IRA for his sole proprietor and contributed. But the sole proprietor has a net loss. The LLC has a net income.

From my understanding, the SEP IRA is a company pension and he should have opened a SEP IRA under the LLC to contribute. But he insists (after discussing it with his SEP IRA provider) he can contribute into his sole proprietor's SEP IRA because his sole proprietor and LLC together has an overall net profit. Am I wrong here? Can you group multiple businesses together to determine the SEP IRA contribution limit? Can you have one SEP IRA for multiple businesses?

To make matters more complicated, no contributions was made into the SEP IRA for his wife even though she is a member of the LLC.

Thank you in advance for any help you can provide.
 

#2
JR1  
Posts:
6043
Joined:
21-Apr-2014 9:31am
Location:
Western 'burbs of Chicago
So the wife is a member of the LLC? If so, I'd agree that she cannot be disregarded.....and I also agree that the two profit/losses are integrated.
Go Blackhawks! Go Pack Go!
Remembering our son, Ben Jan 22, 1992 to Aug 26, 2011.
For FB'ers: https://www.facebook.com/groups/BenRoberts/
 

#3
sjrcpa  
Posts:
6477
Joined:
23-Apr-2014 5:27pm
Location:
Maryland
In certain situations you have to aggregate the businesses- such as common control and affiliated service group. But if you do, wife and any other employees/owners are counted, too.
 

#4
mikrev  
Posts:
41
Joined:
13-May-2015 10:08pm
Location:
Southern California
Thank you very much for your responses!

Another related question. The same client wishes to purchase a large SUV and take the Sec 179 deduction. I warned him about the 50% business use rule. He is certain the business use will be greater than 50%, but only amongst both his sole proprietor and LLC. In other words, he believes he will use this new large SUV 30% for his sole proprietor and 30% for his multi-member LLC. Would he be eligible for the SUV Sec 179?
 


Return to Taxation



Who is online

Users browsing this forum: Google [Bot] and 119 guests