SEP Eligibility & Entry

[mjbais1489]

Hi - I usually can keep all the SEP & SIMPLE rules straight but this one is flummoxing me for some reason.

Our client started a SEP in 2023 with one year of service as an eligibility rule. Employee was hired October 2024. In May of 2025 they updated the SEP to 3 years of service before eligible for the plan.

If they do a SEP contribution for tax year 2025 is the employee required to receive a SEP contribution because they were hired under the 1 year eligibility? or does the employee fall under the 3 year eligibility?

[Bri]

Feels like something you'd find in the actual plan document, whether eligibility would be preserved upon an amendment like that.

 

(EDIT 12-30):  Oh, I thought you were looking ahead to 2026, not the 2025 year the guy had already been a participant under before the amendment.

[Appleby]

On 12/22/2025 at 12:38 PM, mjbais1489 said:

Hi - I usually can keep all the SEP & SIMPLE rules straight but this one is flummoxing me for some reason.

Our client started a SEP in 2023 with one year of service as an eligibility rule. Employee was hired October 2024. In May of 2025 they updated the SEP to 3 years of service before eligible for the plan.

If they do a SEP contribution for tax year 2025 is the employee required to receive a SEP contribution because they were hired under the 1 year eligibility? or does the employee fall under the 3 year eligibility?

That employee must receive a SEP contribution for 2025.