An eligible employee is an individual (including a self-employed individual) who meets all the following requirements:
- Has reached age 21
- Has worked for the employer in at least 3 out of the last 5 years
- Received at least $650 in compensation from the employer during the year for 2021 ($600 for tax years 2016 through 2020)
An employer is allowed to use less restrictive participation requirements than those listed, but not more restrictive ones.
An employer can exclude the following employees from a SEP or SARSEP:
- Employees who are 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 do not have U.S. wages, salaries or other personal services compensation from the employer