--- title: Can I Add a Personal SEP IRA to My Company's 401(k) Plan? description: In this edition of DWC's Question of the Week, we look at whether it's allowable for a partner to set up a personal SEP IRA to make a contribution for himself. image: https://www.dwc401k.com/hubfs/Knowledge%20Center/Pillar%20Categories%202024/PNG%20-%20with%20category%20name/hero_pp_png_category.png --- [![logo](https://www.dwc401k.com/hubfs/_global/logo.svg "logo")](https://www.dwc401k.com/) [![logo](https://www.dwc401k.com/hubfs/Dwc-2019/SVG/logo.svg "logo")](https://www.dwc401k.com/) [![Contribution Limits](https://no-cache.hubspot.com/cta/default/3113501/af3ae025-72b1-41fa-8855-5e196d6c26e4.png)](https://cta-redirect.hubspot.com/cta/redirect/3113501/af3ae025-72b1-41fa-8855-5e196d6c26e4) [![Log in](https://no-cache.hubspot.com/cta/default/3113501/3466ce37-58ba-4a93-bddb-0d4c8bb8ccbc.png)](https://cta-redirect.hubspot.com/cta/redirect/3113501/3466ce37-58ba-4a93-bddb-0d4c8bb8ccbc) [![services-icon1](https://www.dwc401k.com/hubfs/QOTW/March%202020/services-icon1.png) ## Plan Document A properly drafted document is the foundation of achieving the company's objectives and keeping the plan in operational compliance. ](https://www.dwc401k.com/services/plan-document) [![services-icon2](https://www.dwc401k.com/hubfs/QOTW/March%202020/services-icon2.png) ## Plan Compliance We have a fundamental understanding of how critical plan compliance is to both the IRS and Department of Labor. ](https://www.dwc401k.com/services/plan-compliance) [![services-icon3](https://www.dwc401k.com/hubfs/QOTW/March%202020/services-icon3.svg) ## Defined Benefits Services We work with business owners and investment advisors to determine what makes the most sense by providing a detailed cost benefit analysis. ](https://www.dwc401k.com/services/defined-benefits-services) [![services-icon4](https://www.dwc401k.com/hubfs/QOTW/March%202020/services-icon4.svg) ## Mergers, Aquisitions & Related Company Analysis The DWC team is well-versed enough in the nuances and is ready to help you navigate the situation. ](https://www.dwc401k.com/services/mergers-acquisitions-analysis) [![services-icon5](https://www.dwc401k.com/hubfs/QOTW/March%202020/services-icon5.png) ## Plan Corrections DWC's extensive experience with both the IRS and Department of Labor voluntary correction programs allows us to help you address just about any accident that might happen. ](https://www.dwc401k.com/plan-corrections) [![services-icon6](https://www.dwc401k.com/hubfs/QOTW/March%202020/services-icon6.png) ## Government Audits Being selected for an audit can feel overwhelming, but the process doesn't have to be. ](https://www.dwc401k.com/services/government-audits) ![service-right-icon](https://www.dwc401k.com/hubfs/QOTW/March%202020/service-right-icon.svg) ## Investment Advisor Support DWC has a long history of successfully partnering with investment advisors. 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the Alphabet Soup: What’s With All the Acronyms | Part 5](https://www.dwc401k.com/blog/decoding-the-alphabet-soup-whats-with-all-the-acronyms-part-5) [![https://www.dwc401k.com/hubfs/Knowledge%20Center/Pillar%20Categories%202024/SVG%20-%20with%20category%20name/hero_pp_category.svg](https://www.dwc401k.com/hubfs/Knowledge%20Center/Pillar%20Categories%202024/SVG%20-%20with%20category%20name/hero_pp_category.svg) ](https://www.dwc401k.com/blog/decoding-the-alphabet-soup-whats-with-all-the-acronyms-part-4) ### [Decoding the Alphabet Soup: What’s With All the Acronyms | Part 4](https://www.dwc401k.com/blog/decoding-the-alphabet-soup-whats-with-all-the-acronyms-part-4) [![https://www.dwc401k.com/hubfs/Knowledge%20Center/Pillar%20Categories%202024/PNG%20-%20with%20category%20name/hero_rr_png_category.png](https://www.dwc401k.com/hubfs/Knowledge%20Center/Pillar%20Categories%202024/PNG%20-%20with%20category%20name/hero_rr_png_category.png) 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[ DWC ](https://www.dwc401k.com/blog/author/dwc) | Published: 07/24/2017 | [401(k) Plan](https://www.dwc401k.com/blog/topic/401k-plan), [Question of the Week (QOTW)](https://www.dwc401k.com/blog/topic/question-of-the-week-qotw), [DWC](https://www.dwc401k.com/blog/topic/dwc), [SEP](https://www.dwc401k.com/blog/topic/sep), [Controlled Groups](https://www.dwc401k.com/blog/topic/controlled-groups), [SIMPLE](https://www.dwc401k.com/blog/topic/simple), [Affiliated Service Groups](https://www.dwc401k.com/blog/topic/affiliated-service-groups), [Retirement Plan Design](https://www.dwc401k.com/blog/topic/retirement-plan-design), [Pension Primer](https://www.dwc401k.com/blog/topic/pension-primer) ## **Facts** Our firm sponsors a 401(k) plan that includes a 3% of pay safe harbor contribution. The plan also includes a profit sharing provision, but the only company contribution we usually make is the safe harbor. ## **Question** One of our partners has asked whether he can set up a personal SEP IRA so that he can make a contribution for himself equal to the difference between the overall maximum contribution limit of $54,000 (2017 limit, indexed for inflation) and what he receives in our firm’s 401(k) plan. Is that allowable? ## **Answer** Even though a SEP is funded using personal IRA accounts, it is still an employer-sponsored plan. As a result, only employers are permitted to make SEP contributions for their employees, and individuals are not permitted to create SEPs for themselves. In order for the firm to create a SEP (and make a contribution) for this one partner, it would generally have to do so for its other employees as well.  Since the firm has already decided not to make a profit sharing contribution, this is probably a non-starter. If the partner in question receives some form of self-employment compensation from another source besides the firm, he could incorporate or establish a sole proprietorship and then create a SEP with respect to that business. However, he would only be able to consider the compensation he receives from that entity to determine his maximum SEP contribution each year (capped at 25% of pay). Another wrinkle to consider is whether or not the partner’s separate business entity would have to be aggregated with your firm for plan purposes. If there is enough common ownership/partnership interest, the two entities might form a [controlled group](https://www.dwc401k.com/knowledge-center/related-companies-controlled-groups).  Also, if the partner’s company provides services to or in conjunction with your firm, the entities might form an [affiliated service group](https://www.dwc401k.com/knowledge-center/related-companies-affiliated-service-groups). In either event, the businesses would have to be treated as if they are a single employer for purposes of the retirement benefits, which would again trigger the requirement to make a SEP contribution for all of the firm’s employees.  For more information on 401(k) plans, SEPs and SIMPLEs, please visit our Knowledge Center [here](https://www.dwc401k.com/knowledge-center/when-simple-retirement-plans-arent-simple). 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