Default SEP Eligibility
Hello,
If an employer establishes a SEP plan for a company and either leaves the eligibility requirements blank OR doesn’t complete the 5305-SEP form at all, is there any guidance on what the default eligibility would be?
If the company has non-owner employees, would the default be immediately eligibility? Or the most restrictive 3 out of 5 years of service?
Any guidance would be greatly appreciated.
Thank you.
Permalink Submitted by Alan - IRA critic on Thu, 2024-08-01 14:42
Leaving the prior year service requirement blank would result in there being no prior service requirement, ie immediate eligibility.
Not completing a 5305 SEP or having a prototype SEP in place could result in any number of potential problems if there are other employees.