SEP-IRA as employee

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strycker001
Posts: 6
Joined: Wed Jan 17, 2018 11:20 am

SEP-IRA as employee

Post by strycker001 » Wed Jan 17, 2018 11:28 am

I'm 1 person in a 2 person partnership in an S Corp. We decided to open SEP-IRA accounts a little more than 2 years ago to contribute to. We have a 66/33 ownership in the business. At the time, he had all his investing with Edward Jones, so we opened the SEP-IRA with them as well. It sounded like I had to have my SEP-IRA account with them as well so that he could contribute to them at the same time. Is this not the case? At this time I have now been 'grandfathered' and no longer can contribute to that account with EJ due to the fiduciary rules that were imposed upon them.

My main question now is this: Can I open a SEP-IRA with one of the bigger companies (Schwab, Vanguard, etc.) while he still has his account at Edward Jones? Am I tied to his account at all since he is considered the employer and I am the employee? This has been extremely confusing, and as with many others, I DO NOT want to be with Edward Jones.

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PaddyMac
Posts: 1472
Joined: Fri Jul 09, 2010 10:29 pm

Re: SEP-IRA as employee

Post by PaddyMac » Wed Jan 17, 2018 11:48 am

I don't think it matters that you have the smaller share. And I don't think there is any rule that says you have to have the same custodian, unless it's in your employment contract or something.

Is the S Corp making the payments or are you making them? Also note that SEPs are usually EmployER contributions only; so you might feel like an employee but the contributions are not.

Also, you guys would have been much better off opening a 401k at Vanguard or Fidelity, as you could grow into it and eventually sock away far more than in the SEP. In the 401k, the EmployER contributions are the same "space" and calculated the same was as the SEP. But you also have this lovely simple EmployEE side that doesn't involve weird calculations. You also get the option of tax-deferred space or Roth 401k space. You can open a 401k up until next December 31, and some custodians allow you to roll over the SEP into it.

But yes, run from Edward Jones. Just run.

strycker001
Posts: 6
Joined: Wed Jan 17, 2018 11:20 am

Re: SEP-IRA as employee

Post by strycker001 » Wed Jan 17, 2018 12:13 pm

Yes, I used to have a Simple IRA at my old job. That currently sits idle with American Funds. Now I have this stagnant account with Edward Jones. I may be able to move it apparently to Schwab because I've had it longer than 2 years. That would be ideal for me. I would much rather self-direct my investments instead of paying someone else to do what I can already do.

To top if off, our 'advisor' left the company without telling anyone and moved to Wells Fargo. She then tried to recruit us over there. We didn't bite on that offer. Last 3 months they have been attempting to fill the EJ office position and finally have a new 'advisor' who happens to have moved over from Wells Fargo. No confidence that I want to even meet with them at this point. The previous advisor moved my money into money market shares from cash without my approval. Then when I made my purchase, she left about $12 in the money market that was then under the minimum and I incurred fees for 2 months because of it. She also had some of my dividends going into the cash account that then in turn went to pay the fees. You aren't kidding about running from them, as fast as possible.

My partner has limited investment knowledge and trusts EJ to do it for him. The SEP was the simplest solution at the time. He is also nearing retirement, so the 401k is not really going to be something he would be interested in setting up at this time.

strycker001
Posts: 6
Joined: Wed Jan 17, 2018 11:20 am

Re: SEP-IRA as employee

Post by strycker001 » Mon Jan 22, 2018 12:43 pm

After a quick Ed Jones discussion via phone with my new FA there, it sounds like I can leave without a problem (fees may OBVIOUSLY apply.) He does want to have a 'sit down' to discuss the option of EJ though. I may oblige him that before ducking out. I made it pretty known on the phone call I was not a fan of the previous FA (who he has no background on) and the way my investments were handled, from not setting up direct re-investments of dividends to leaving under the minimum in a money market share account (that I did not authorize either) which led to them taking my dividends as fees for being under said minimums. That company is just slimy all the way around.

I like the idea of being able to manage my own account and would much rather do that. May be looking into a Schwab account since my wife already has one there and they've been rather easy to deal with. Her's is self-directed as well.

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