Ineligible SEP Contribution - Spidell

Ineligible SEP Contribution

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Message Board Ineligible SEP Contribution

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    • #187750
      Ronald Petersen
      Participant

      Taxpayer established and funded a SEP IRA when he was a sole proprietor.  He then became a member in an LLC and continued to fund his established SEP IRA based on self-employment earnings as reported on the LLC k-1.  Bottom line: he has been making ineligible SEP IRA contributions for the past 4 years.  How does he correct the error?  Does he take out all the contributions and earnings for the past 4 years?  Does he then report the excess contributions on Form 5329 and pay the 6% excise tax for all the years the money was in the plan?  Does he amend the returns involved and eliminate the adjustment to income?  Only problem here is that two of the years involved are outside the statute of limitations.  I’ve done a lot of serach and contacted a number of experts in the field and there doesn’t appear to be a definitive solution.  Would appreciate any thoughts on the matter or referrals to someone that might have been down this road.

    • #188396
      Lynn Freer
      Participant

      Technically I believe the individual must file Form 5329 for each year and pay the penalty. They also must withdraw the funds and related earnings.

    • #188829
      Ronald Petersen
      Participant

      Lynn,

      Thank you for your prompt response.  Unfortunately, the devil is in the details.  Do you happen to know an ERISA attorney or specialist that I can contact.

      Ron

    • #189168
      Lynn Freer
      Participant

      Larry Pon, who is presenting the complex IRA seminar/webinar has a suggested referral for help. Kevin Long
      https://www.employeebenefitslawgroup.com/who-we-are/our-team/

      You might also contact Benefits Associates at https://www.benefitassoc.com. Tell them I referred you.
      Lynn

    • #189192
      Ronald Petersen
      Participant

      Lynn,

      Thanks for the referrals.  I will pursue.

      Ron

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