SEP contribution for termed employees

[Guest bmurphy]

Client is adopting a new SEP plan with an effective date of 7-1-2004 to coincide witrh beginning of fiscal year. 2 employees who would have been eligible for the plan have terminated employment. Is the employer required to make a contribution for them? Didn't know if the fact that the plan is being adopted retroactive had any bearing.

[Gary Lesser]

ABSOLUTELY, if they were employed on the effective date of the plan and were otherwise eligible (e.g., earned over $450 if required).