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SEP IRAs for employees
Am I eligible to participate in my employer’s SEP IRA plan?
Am I eligible to participate in my employer’s SEP IRA plan?

Eligibility for a SEP IRA is based on age, years of service with the employer, and compensation.

Updated over a week ago

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.

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