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Multiple SEP Plans for One Employer


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An exclusion about collective bargaining might apply in fitting circumstances.

I.R.C. § 408(k)(2) Participation Requirements — This paragraph is satisfied with respect to a simplified employee pension for a year only if for such year the employer contributes to the simplified employee pension of each employee who—

I.R.C. § 408(k)(2)(A) — has attained age 21,

I.R.C. § 408(k)(2)(B) — has performed service for the employer during at least 3 of the immediately preceding 5 years, and

I.R.C. § 408(k)(2)(C) — received at least $450 in compensation (within the meaning of section 414(q)(4)) from the employer for the year.

For purposes of this paragraph, there shall be excluded from consideration employees described in subparagraph (A) or (C) of section 410(b)(3).  For purposes of any arrangement described in subsection (k)(6), any employee who is eligible to have employer contributions made on the employee's behalf under such arrangement shall be treated as if such a contribution was made.

I.R.C. § 410(b)(3) Exclusion Of Certain Employees — For purposes of this subsection, there shall be excluded from consideration—

I.R.C. § 410(b)(3)(A) — employees who are included in a unit of employees covered by an agreement which the Secretary of Labor finds to be a collective bargaining agreement between employee representatives and one or more employers, if there is evidence that retirement benefits were the subject of good faith bargaining between such employee representatives and such employer or employers[.]

To write a plan’s (or several plans’) provisions to sort employees by each collective-bargaining unit and those who are unrepresented, don’t use Form 5305-SEP; instead, use an employee-benefits lawyer coordinating with a labor-relations lawyer.

But why use a SEP?

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania



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