SEP IRA coverage

[Lori Foresz]

Hi,

I am trying to remember the rules on which employees a SEP IRA must cover and I don't have my ERISA outline book to refer to (ouch).

Can someone refresh my memory? Must the SEP be offered to all employees? I seem to recall it must cover all employees who have worked 2 out of the last five years, or something to that affect?

Please let me know.

Many thanks!

[Appleby]

All employees who work three of the five preceding years must be allowed to participate in the SEP. Employees who earn less than $450 for the year, employees under age 21, non-resident aliens and employees under a collective bargaining agreement may be excluded.

For SEP IRA purpose, a years of service is any period , however, short. For instance, if the employee worked one week of the year, that is considered one year of service.

The employer may use less rigid eligibility requirements , for instance reducing the years-of-service, age or compensation requirements.