I'm getting conflicting advice from my CPA and a tax advisor who is trying to get my business. Anyone know where to find the answer to this?
I was the sole proprietor of a healthcare practice which I sold 6-1-07. I had one full-time employee of greater than 3 years duration and 2 part-time employees.
I had income from work as an independent contractor from 6-1-07 till the end of the year of $11k, which my CPA said I could put all of into a solo 401K.
Now a tax advisor is telling me that I need to contribute to a retirement plan for each of my 3 ex-employees based on my contribution to a solo 401K because they are considered to be my employees for the entire year! ? He said if I contribute to a solo 401k plan in the same year in which I had employees as a sole proprietor than - EVEN IF they were not my employees at the time I earned that income - they are considered part of my retirement plan. Does that make any sense?
I was also planning to make a contribution to a SEP. In previous years I made a matching contribution to my one long-term full-time employee's SEP. I understand that is not required if she worked less than 1,000 hours for me durnig the year. Is that accurate? I still plan to make a contribution to her SEP but it depends on what my requirement are regarding the 401K.
I was the sole proprietor of a healthcare practice which I sold 6-1-07. I had one full-time employee of greater than 3 years duration and 2 part-time employees.
I had income from work as an independent contractor from 6-1-07 till the end of the year of $11k, which my CPA said I could put all of into a solo 401K.
Now a tax advisor is telling me that I need to contribute to a retirement plan for each of my 3 ex-employees based on my contribution to a solo 401K because they are considered to be my employees for the entire year! ? He said if I contribute to a solo 401k plan in the same year in which I had employees as a sole proprietor than - EVEN IF they were not my employees at the time I earned that income - they are considered part of my retirement plan. Does that make any sense?
I was also planning to make a contribution to a SEP. In previous years I made a matching contribution to my one long-term full-time employee's SEP. I understand that is not required if she worked less than 1,000 hours for me durnig the year. Is that accurate? I still plan to make a contribution to her SEP but it depends on what my requirement are regarding the 401K.