A potential client currently has a grandfathered SAR-SEP using the IRS model doc. They have already made some contributions for 2003 but now are realizing a cross-tested plan gives them far more leverage for their key group of employees.

I'm trying to see there is anything that can be done for 2003. I don't believe they can have another qualified plan if they are on the Model SAR-SEP document. If true, would restating the SAR-SEP onto a customized doc in 2003 get around this problem ? They haven't made large contributions so there is sufficient deduction room for another plan. Does re-writing the SAR-SEP into a customized doc impact their grandfathered status on the SAR-SEP ?

Thanks in advance for any thoughts or opinions.

In most cases, the client could adopt a prototype or individually designed SEP/SARSEP that wd allow for its continuance along with a qualified plan for 2003. For grandfathering purposes, IMO, do not formally terminate the SEP/SARSEP. Just let it remain "temporarily discontinued" (read: dormant; but do provide the annual contribution notice and any notices regarding amendments and the discontinuance of contributions). Perhaps the SEP could be used to hold top-heavy contributions?

Thanks for the help Gary. [Your welcome.]