A new business is established on January 1, 1998. The firm wants to implement a SEP for 1998. Must this SEP have immediate eligibility (i.e. age 21 and 0 out of the last 5 yrs employment) or can eligibility still be conditioned on age 21 and working 3 out of the last 5 years for the employer with the understanding that everyone is eligible for 1998 since the company did not exist prior to 1998? Also, in any case, wouldn't everyone age 21 with $400 in comp for 1998 need to be included in the 1998 allocation, even those hired during 1998 but after January 1, 1998?

Thanks,

Mike

Nope - rules are rules. If your document says you have to have worked for at least 3 of the last 5 years then no one meets the requirements. If you want the employees to be eligible, you can not require prior years. You can, however, amend your SEP on January 1 next year to require one year and amend it the following January 1 to require 2 years.....