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.