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Per the 408(k) IRS rules, less restrictive rules may be established to include employees and owners in this retirement plan (see below). Assuming that I start the 408(k) for my company on January 1st, 2017, and we just started a new company on the same date, can one of the less restrictive eligibility requirements be the following?: Employees do not have to fulfill the requirement of the 3 out of 5 year working at the company and may qualify for the 408(k) regardless of the number of years they have worked for the company if they are part of the executive staff. The executive staff includes the following positions: CEO, CTO, CFO, President, Vice President, Director. All other employees qualify for the 408(k) once they meet the 3 out of 5 year requirement. This seems like a less restrictive requirement that we can set up and allows us to fund the SEP IRA's for owners and/or executive staff as an incentive to attract people at those positions, while also not mandating that we fund everyone's SEP IRA immediately. 4.72.17.4 (07-06-2016) Coverage and Participation Requirements All eligible employees must be allowed to participate. An eligible employee is an employee who: Is at least 21 years old. See IRC 408(k)(2)(A). Has performed service for the employer in at least three of the immediately preceding five years. See IRC 408(k)(2)(B). Has received at least $450 in compensation (as adjusted under IRC 408(k)(8)) from the employer for the current year. See IRC 408(k)(2)(C). Also see IRM 4.72.17.13 for the SEP minimum compensation limits. An employer may establish less restrictive eligibility requirements than these.