The IRS has deemed the following employees eligible for participation in a Simplified Employee Pension (SEP) IRA plan:
At least 21 years of age
Has worked for the employer in at least 3 of the last 5 years
Received a minimum of $600 in compensation from the employer during the year
Please note, that an employer can use less restrictive requirements if they choose to, but cannot impose more stringent requirements.
Employers do have the right to exclude certain types of employees from participating in their SEP IRA even if they meet the requirements of the plan. These include:
Employees covered by a union agreement and whose retirement benefits were bargained for in good faith by the employees' union and the employer
Nonresident alien employees who did not receive US wages or other service compensation from their employer
To learn more about the eligibility requirements for your SEP IRA, you can review the IRS Form 5305 provided to you by your employer. For more information, please visit the IRS website.