SEP IRA Eligibility
I have a client who wishes to set up a SEP. I forget how the ‘Must work 3 of the past 5 years” rule.
So any employee has to WAIT 3 years to be Eligible? (and over age 21)
Thanks for the reminder.
I have a client who wishes to set up a SEP. I forget how the ‘Must work 3 of the past 5 years” rule.
So any employee has to WAIT 3 years to be Eligible? (and over age 21)
Thanks for the reminder.
Permalink Submitted by Alan - IRA critic on Wed, 2024-07-17 17:31
3 out of 5 is the maximum restriction. Employer does not have adopt any restrictions as to prior years of service or age. And because the client is treated as an “owner-employee” client could not have any work year restriction if this was a new business. But if client has been in business for 3 years, they could adopt the 3 of 5 years if they did not want to include new hires or perhaps an employee who has only been there 1 or 2 years. In other words, the restrictions should be reduced to less than 3 of 5 if the situation calls for it.