dmertz
Level 15

Retirement tax questions

The answer depends on the requirements that you state with you establish the plan.  As stated in your reference, the 3-out-of-5 year requirement is the maximum service requirement that you can specify, however, you are permitted to establish less a restrictive service requirement such as zero years of service.

Most SEP plans are established using Form 5305-SEP.  The second blank on that form allows you to specify zero years of service as the service requirement, resulting in all employees (i.e., yourself in a SMLLC/SP) meeting the other eligibility requirements being participants.

https://www.irs.gov/pub/irs-pdf/f5305sep.pdf