If a SARSEP fails to meet the SARSEP requirements are the tax benefits for the employer and employees lost?
Generally, tax benefits are lost if the SARSEP fails to satisfy the Internal Revenue Code requirements. However, the employer can retain the tax benefits if it uses one of the IRS correction programs to correct a failure. In general, when correcting a failure under the program, the correction should put employees in the position they would have been had the failure not occurred.
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