Small business owner established a SEP IRA 3 years ago and the business contributed to the SEP IRA for the owner each year. During that 3-year period, the small business had no other employees but operated with Independent contractors. On January 1, 2021, the independent contractors were converted to employees and some additional employees were hired. The SEP Agreement (Form 5305-SEP) provides, in part, that the employer agrees to provide discretionary contributions to IRAs of all employees who are at least 21 years old and "have performed services for the employer" in at least 3 of the past 5 years. Does the 3-year eligibility clock for the employees start to run as of January 1, 2021 (when they became employees) or does it go back to the time that one or more of the employees started working for the business as an independent contractor?
