partner and SEP

[winnie]

I have a partner in a fairly large partnership that cannot participate in the partnership's retirement plan in '08. He just joined the firm in Dec. The partnership clearly has a 401 k plan and a profit sharing plan that partners usually participate in. Since my partner is not eligible for that in 2008, we are looking for options.

Most of my research indicates that a retirement plan (I am thinking SEP) has to be established by the partnership. Yet, I come across some information that a partner paying self employment taxes is considered self employed and can set up his own plan.

Any thoughts on this?

[amonEA]

No you can not set up a SEP IRA for this partner. The Sep IRA must be set up at the Partnership Level. SO if the Partner can not Participate in the Partnership 401 than he is going to have to rely on his traditional or roth IRA for 2008. Even though he pays the SE Tax on his K1 he is still a partner and has to participate in that plan.

Hope this helps.

[winnie]

That verifies what I thought. Thanks.