zigipha[at]hotmail.com wrote:
- quote -

by definition not an employee. Should your wife set up the plan
and higher an employee who makes at least $5K per annum, then
that employee can elect to contribute to the plan. If the
employee elects to contribute, then your wife as the employer
would have to make matching contributions of 3% of compensation
OR nonelective contributions of 2%. A nonelective contribution
means that your wife makes the 2% contribution even if the
employee elects not to contribute to the plan. There is a rule
that allows a match of less than 3% (minimum of 1%) for any two
years out of a five year period.

See IRS Pub 560 for more details on what retirement options are
available to the self-employed who have or do not have employees.

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My wife is trying to set up a retirement plan (9/4/208). She had an
employee (employee started as a regular paid in 12/05) and employees
some of the kids (under 5k a year).

she wants to set up a retirement plan and is looking into setting up a
simple (in order to avoid the mandatory match for SEP).

I get the impression that the kids can be excluded, but is the now-
terminated employee eligible? If so, what is the means of
notification?

Any thoughts on (requiring use of the same inancial institute that the
wife will be using) vs (having the employee pick their own)? How do I
match if the former employee makes contributions on their own (since
we no longer pay them). If former employee contributes on their own,
how does wife found out about it?

thanks!

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >