2021 corporate SEP-IRA contribution

[oregon taxes]

I have a C corporate client in the homestretch of a 2020 and 2021 Federal audit. In 2021, my client (age 55+) contributed $51,500 to the SEP-IRA. His compensation in 2021 was $180,000. I know that the 2021 limit is the lesser of a) 25% of compensation OR b) $58,000. He contributed $45,000 (based on his wages) PLUS $6,500 as a catch-up contribution. The current law says that catch-up contributions are not permitted in the SEP plans. Was the catch-up contribution allowed in 2021? If so, where can I find the source for this information?

I look forward to your response.

[DoubleO]

SEPs are only funded by the employer. No employee contributions are allowed to an SEP, so there is no catch-up provision in an SEP.

[DoubleO]

I’m guessing the Corp deducted the $6500 as an employee benefit, which auditor is probably disallowing. Are there now excess contributions to the SEP-IRA?

[New York Enrolled Agent]

Was the catch-up contribution allowed in 2021? If so, where can I find the source for this information?

Follow up to DO - the elective deferral for an employee for a SEP is long gone. See IRC 408(k)(6)(H)

(H) Termination. This paragraph shall not apply to years beginning after December 31, 1996. The preceding sentence shall not apply to a simplified employee pension of an employer if the terms of simplified employee pensions of such employer, as in effect on December 31, 1996, provide that an employee may make the election described in subparagraph (A).