CPA has a Corp with 7 Employees and has a SIMPLE IRA Plan that he fully funds for himself. He is a Licensed Stock Broker (sole proprietor) and has a SEP with him as the only employee, which he fully funds. Both of these plans are funded to the max as if the other plan doesn't exist. Is this OK?

He's the sole shareholder of the CPA practice?

Yes, he is the 100% stockholder of CPA practice. That Corp. has 7 EE's.

One trouble with this situation is the failure of the sole proprietor's SEP arrangement to provide contributions (i.e., to cover) the employees of the corporation. A SEP arrangement is simple but clumsy in this regard; it has to cover all of the age-and-service-eligible employees of the "employer," applying the common control rules of Code section 414©. A corporation wholly owned by a sole proprietorship would be a "brother-sister group of trades or businesses under common control." (See Treas. Reg. section 1.414©-2©.) So the SEP's failure to provide contributions for the corporation's employees means the contributions into the IRA have not been made under a simplified employee pension arrangement after all, and would be treated like any other excess contributions to an IRA (to the extent they exceed $2,000 per year).

An employer maintaining a SIMPLE IRA plan may not maintain other qualified retirement plans in which employees currently accrue benefits. Under IRC Sec. 408(p)(2)(D), qualified retirement plan, for this purpose includes a SEP plan (IRC Sec. 408(k)). Control Group Rules would apply.

The SIMPE IRA plan would seem to be invalidated. See other responses in this forum.