Company has a SEP and makes contributions on a monthly basis. Employee has been terminated. The way I understand it, under a SEP each employee must share in any contribution the employer makes for a particular year. Does that mean that the employer must continue to make contributions on the terminated employee's behalf? (Employee has already received contributions for Jan, Feb. and March 2006; question is whether he must receive contributions for April - December 2006?)

SEP contributions are allocated on the basis of annual compensation. If the annual allocation is to be 10%, and you were putting in 10% as you went along, then you should be done. But you still need to do the calculation on an annual basis, and check the allocation against the deposits.

Thank you! That makes perfect sense.