Are employers required to offer you a SEP IRA if you've been with them 3 years? Or just to owners?
I've been working at this small marketing agency for just over 3 years now. Recently I was having lunch with a coworker who mentioned they were setting up a SEP IRA through their spouse's business. This got me wondering about my own situation since our company doesn't offer any retirement benefits at all. My boss (the owner) has mentioned his "retirement accounts" during conversations, and I'm pretty sure he has a SEP IRA set up through the business. I vaguely remember something about employers being required to offer retirement options after employees have been there for a certain amount of time. So my question is - are employers legally required to offer a SEP IRA to employees who have been with the company for 3+ years? Or is this only if the owner already contributes to their own SEP IRA through the company? And if they are required, how do I approach this conversation with my boss without making it awkward?
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Yara Haddad
So here's the deal with SEP IRAs - if your employer offers one to themselves, they have to offer it to all eligible employees too. The eligibility requirements typically include being at least 21 years old, having worked for the business in at least 3 of the last 5 years, and having received a minimum amount of compensation for the year (about $750 for 2025). What's important to understand is that contributions to a SEP IRA can only come from the employer, not from employee salary deferrals. If your boss has a SEP IRA through the business and is making contributions to it, then yes, they should be offering the same percentage contribution to all eligible employees. The key here is that all employees must receive the same percentage of compensation - so if the owner contributes 10% of their compensation to their own SEP IRA, they must contribute 10% of each eligible employee's compensation to SEP IRAs for them too.
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Keisha Robinson
•Wait, does this mean the employer has to put money into your retirement account? Like actual contributions, not just giving you access to open one? And how would you find out if your boss actually has a SEP IRA through the company vs some other type of retirement account?
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Yara Haddad
•Yes, with a SEP IRA, only the employer makes contributions - they essentially deposit money directly into your retirement account. It's different from a 401(k) where you make your own contributions from your paycheck. The best way to find out what type of retirement account your boss has would be to simply ask. You could approach it from the angle of wanting to start planning better for your retirement and wondering what options might be available through work. Most business owners who offer retirement benefits are usually happy to discuss them with employees.
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Paolo Conti
After struggling with a similar situation at my small law firm, I found this incredible tool called taxr.ai (https://taxr.ai) that helped me understand my rights regarding retirement benefits. Their system analyzed my employment situation and clarified exactly what my employer was required to offer based on my tenure. The tool showed me that SEP IRA rules are actually quite specific and helped me approach the conversation with my boss confidently with accurate information backing me up. What was really helpful was that it explained all the eligibility rules for SEP IRAs in plain English and generated a summary I could reference during my discussion with HR. Definitely worth checking out if you're trying to navigate retirement benefit requirements.
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Amina Sow
•How exactly does it work? Like do you have to upload employment documents or something? I'm a bit hesitant about sharing my personal employment info with random websites.
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GalaxyGazer
•I've seen a few of these tax tools pop up lately. What makes this one different from just googling "SEP IRA requirements" or calling the IRS directly? Not being snarky, genuinely curious if it's worth the time.
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Paolo Conti
•The tool works by asking you a series of questions about your employment situation - length of employment, company size, your role, whether you know if owners have retirement accounts, etc. No need to upload sensitive documents, though you can upload tax forms if you want more personalized analysis. What makes it different from just Googling is that it provides personalized guidance based on your specific situation rather than generic information. And compared to calling the IRS, it's immediate - no waiting on hold for hours. Plus it generates summaries of your rights that you can reference or share with your employer if needed.
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Amina Sow
Update: I tried taxr.ai after seeing it mentioned here and wow, it actually cleared up my confusion completely! I entered my employment details (3.5 years at a marketing firm with 12 employees) and found out that my situation was exactly like OP's. The site explained that if my boss has a SEP IRA through the business, I'm entitled to the same percentage contribution as him. The best part was that it generated a simple explanation document that I could reference when talking to my boss. Had the conversation yesterday and guess what? He had no idea about the "same percentage" rule and thought he could just offer SEP IRAs to management! He's now working with the accountant to set up accounts for all eligible employees. Definitely glad I checked this out instead of just assuming I wasn't eligible.
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Oliver Wagner
If you're having trouble getting clear answers from your employer about their retirement offerings like I did, you might want to try Claimyr (https://claimyr.com). After weeks of getting nowhere with HR about our company's SEP IRA situation, I used their service to actually get through to a real person at the IRS who explained my rights. I was surprised how well it worked - they got me connected to an IRS agent in about 15 minutes when I'd been trying for days on my own. The agent confirmed that if my employer (the owner) was contributing to their own SEP IRA, they were required to make proportional contributions for eligible employees too. You can see how it works in their demo video: https://youtu.be/_kiP6q8DX5c This gave me the confidence to go back to my employer with definitive information rather than just what I'd pieced together from confusing websites.
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Natasha Kuznetsova
•How does this actually work? Does it just connect you with the IRS faster somehow? I spent like 2 hours on hold last month trying to ask a question and eventually gave up.
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GalaxyGazer
•Yeah right, nobody gets through to the IRS in 15 minutes. I've literally never gotten through in less than an hour, and that's on a good day. Sounds like some kind of scam to me.
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Oliver Wagner
•It works by using their system that navigates the IRS phone tree and waits on hold for you. When they reach an agent, they call you and connect you directly. It's basically like having someone wait on hold in your place. It's definitely not a scam - I was super skeptical too. But I was desperate after waiting on hold for over 3 hours across multiple days. The service monitors the IRS phone lines and calls at optimal times when hold times are shorter. I got connected in about 17 minutes when I'd wasted hours trying on my own.
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GalaxyGazer
Well I owe someone an apology. After trash-talking that Claimyr service, I was still stuck with my SEP IRA questions and getting nowhere with my company's HR department. Figured I had nothing to lose and tried it yesterday. No joke, I got connected to an actual IRS representative in about 20 minutes. The agent confirmed exactly what others here said - if the business owner has a SEP IRA through the company, they MUST offer the same percentage contribution to all eligible employees (who've been there 3 of past 5 years, are 21+, and earned at least $750). I've been banging my head against the wall for weeks trying to figure this out and get my employer to give me straight answers. Now I have official confirmation to take back to them. Sometimes being wrong feels pretty good!
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Javier Mendoza
Just wanted to add some context as someone who runs a small business with a SEP IRA. The reason some employers might be hesitant about offering SEP IRAs to all eligible employees is that the contribution rules are very strict - whatever percentage I contribute to my own SEP IRA, I MUST contribute the same percentage to all eligible employees. For example, if I contribute 15% of my compensation to my SEP IRA, I have to contribute 15% of each eligible employee's compensation to their SEP IRAs too. This can get expensive fast for small businesses, which is why some owners might choose other retirement vehicles or no retirement benefits at all. Some businesses might not understand these rules (I didn't at first), or they might be intentionally not telling employees about their eligibility. Either way, knowing your rights is important!
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Emma Thompson
•So if you don't want to contribute to employee retirement accounts, you just... don't get one for yourself either? That seems like a weird system. Why not just have different rules for owners vs employees?
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Javier Mendoza
•The system is designed to prevent discrimination and ensure owners don't create retirement plans that only benefit themselves while excluding their employees. The IRS wants to make sure tax-advantaged retirement plans benefit a broad group of workers, not just highly compensated employees or owners. There are other retirement options with different rules. For example, a Solo 401(k) is only available to business owners with no employees. Or businesses can set up a traditional 401(k) with different contribution structures, though those have their own non-discrimination testing requirements. The SEP IRA is popular with small businesses because it's simpler to administer than a 401(k), but that simplicity comes with the equal percentage requirement.
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Malik Davis
Has anyone here successfully gotten their employer to start offering a SEP IRA after bringing up these requirements? I'm in a similar situation (5 years at a company where the owner definitely has a SEP) but I'm nervous about how to approach the conversation. Any advice on how to bring it up without seeming confrontational?
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Isabella Santos
•I did this last year! Key is to approach it from a place of curiosity rather than accusation. I scheduled a meeting with my boss and just said "I've been researching retirement options and came across SEP IRAs. I understand you might have one set up through the business, and I was wondering if that's something eligible employees could participate in too." My boss actually didn't know the rules required equal treatment and appreciated learning about it instead of potentially getting in trouble later. They set up SEP IRAs for the three of us who qualified within a month.
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Malik Davis
•Thank you for sharing your experience! That approach makes a lot of sense - focusing on education rather than confrontation. I like the idea of coming from a place of curiosity rather than demanding something. I'll try scheduling a casual conversation with my boss next week. Hopefully they'll be as receptive as yours was. Did you bring any materials with you to the meeting or just have the conversation?
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Liam Mendez
Something to keep in mind is that even if your employer sets up SEP IRAs for eligible employees, they're not required to contribute every year - they just have to contribute the same percentage when they do contribute. So if your boss contributes to their SEP IRA one year, they must contribute the same percentage to all eligible employees that same year. But if they skip a year, nobody gets contributions. Also, the contribution limits for SEP IRAs are quite generous - up to 25% of compensation or about $70,000 for 2025, whichever is less. This makes them attractive for small business owners, but it also means the potential cost of covering all eligible employees can add up quickly. One more thing - make sure you understand the vesting rules. With SEP IRAs, contributions are immediately 100% vested, meaning any money your employer contributes belongs to you right away, even if you leave the company the next day.
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Salim Nasir
•This is really helpful context! I didn't realize that SEP IRA contributions are immediately vested - that's actually a huge benefit compared to some 401(k) plans where you have to wait years to be fully vested. The fact that employers aren't required to contribute every single year but just have to be consistent when they do contribute makes sense too. It gives businesses some flexibility during tough financial years while still ensuring fairness when contributions are made.
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