I am a self employed real estate agent with a Net Schedule C income of $500,000. I have a SEP IRA plan and hire my employees though Kelly Staffing. My employees have a 401k plan available to them through Kelly and I have matched them up to $5000 of deferrals. I know I have to cover them under my SEP plan but can I reduce the amount I have to contribute for them based on what I matched them in the 401k? I want to make a 40k contribution for myself (20%X200k). I have given an employee a 10% match so a 20% contribution would overcontribute them. What should I do?

Unless the leasing organization provides for a 10% of pay (Money Purchase Plan) type of contribution, you cannot exclude these employees from your plan. The plan you have described is not comparable to what is required.

Since you and the other employer and unrelated business entities, you cannot "offset" contributions made to that plan from your SEP.

Any chance you are older (eh, more mature.... ) than the bulk of the other employees?

If so, you may be able to benefit from a new-comparability / cross-tested profit sharing plan.

If this is true, you should seek out a qualified Third Party Administrator in your area. Be sure to ask if they handle cross-tested plans, many don't have the capacity for this type of plan.

Note- many CPA's are still not aware of their existence - so exercise caution with whatever advice a CPA may give. (I do not mean any offense by this statement. It has just been my experience that many CPA's steer clients toward SEP's, Simple's, etc. regardless of what is really best - they just don't know any better..............)