Why sign in to the Community?

  • Submit a question
  • Check your notifications
Sign in to the Community or Sign in to TurboTax and start working on your taxes
New Member
posted Jun 5, 2019 3:41:20 PM

Can an LLC (SMLLC/SP) less than 3 years old make SEP IRA contributions? According to IRS eligibility criteria, they state one must have worked for the LLC 3 of 5 years?

0 2 986
2 Replies
New Member
Jun 5, 2019 3:41:22 PM
Level 15
Jun 5, 2019 3:41:23 PM

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