Can a SEP have a short Plan Year?

1. Could a company start a SEP part way through an initial year and only fund on compensation earned from some point during the plan year and forward?

2. Can a company terminate a SEP during the plan year? This case is a SAR-SEP. So they want to stop deferrals at 6/30 and do all the testing on the short period.

Thanks for any feed back.

Not really, although a fiscal plan year can be changed to the calendar year. Code Section 415 limitation years can be changed. But, regulations require that contributions be tested on compensation for the entire year. The 125 percent ADP test is also based on compensation for the plan year. It is unclear whether the $160,000/200,000 compensation cap has to be prorated. No guidance on issue. Any one who would have entered the plan during the full plan year would also have to be considered. Once terminated, it is unclear whether a SARSEP can be readopted (my guess is "no"). Hope this helps.