Stop us if you’ve heard this one before – a SEP, a SIMPLE, and a 401(k) walk into a bar…unfortunately, there’s not a great punch line at the end of this one. Instead of some good laughs, this situation is a recipe for some issues in need of attention. While it might be unusual for a single company to establish one of each, it is not nearly as far-fetched to discover that related companies may have setup separate types of plans for their respective employees, one with a SEP or SIMPLE and another with a 401(k) plan. This isn’t necessarily a problem with respect to the 401(k) plan, but the SEP and SIMPLE rules restrict how those types of plans can co-exist with others.
Topic Archive: SEP
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.