SEP: Employee Eligibility Question
We have an employee that provided services in 2013, 2014 and 2015. Our plan requires that employees provide services in at least three of the immediately preceding five years to be eligible.
When determining if this employee is eligible for the 2015 SEP contribution, do I include 2015 as a tax year or just look at the years prior to 2015? If I only look at prior years, she would not be eligible for a SEP contribution until 2016. Is this correct?
Thanks for your help.
Permalink Submitted by Alan - IRA critic on Wed, 2015-12-02 20:01
If the plan has adopted 3 years for eligibility, the years counted are only prior years, not the current year. This employee would not be eligible for SEP contributions until 2016 when they would then have the 3 prior years of service. 2015 service does not count as a service year with respect to 2015 contributions. For 2015 the employee only has 2 prior years of service.