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I am located in NY. I have a PC (my business) and an LLC which holds the office space for my PC. The owners of the LLC is my self and my son. I am the sole owner of the PC. What are the rules of giving out a SEP contribution through the LLC? Am I allowed to do it? Is there any difference from the PC?

Additional info that might help: So when we created the LLC money was lent to that LLC from me and my son in order to purchase the real estate. So the LLC owes us money, the LLC receives rent from the PC.

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From Schwab -

What are the eligibility requirements for a business to establish a SEP-IRA?

Almost any type of business is eligible to establish a SEP-IRA, from self-employed individuals to multi-person corporations (including sole proprietors, partnerships, S and C corporations, and limited liability companies [LLCs]), tax-exempt organizations, and government agencies.

What are the contribution limits?

You may contribute up to 25% of compensation (20% if you’re self-employed3) or $49,000 for 2011 and $50,000 for 2012, whichever is less.

If we set the PC aside, you and the son have an LLC renting office space, this addresses the ability of the LLC to offer the retirement account.

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  • I added some additional info if that changes anything. But just so I understand this, the LLC can contribute to a SEP for us if we get a paycheck? But the money we get from the LLC paying us back is that considered compensation?
    – htc
    Jun 22, 2012 at 18:41
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    @htc no, because its loan repayment.
    – littleadv
    Jun 22, 2012 at 18:53
  • "no" is correct. An LLC might have numerous financial transactions. The SEP deposits are based on "compensation" the LLC pays to its employees. Jun 22, 2012 at 19:04

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