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TLS, have you I.R.S. SPECIFICATIONS TO BE REMOVED BEFORE PRINTING
transmitted all R Action Date Signature
text files for this INSTRUCTIONS TO PRINTERS
FORM 5305-SEP, PAGE 1 OF 2
cycle update? MARGINS; TOP 13mm (1/2"), CENTER SIDES. PRINTS: HEAD TO HEAD O.K. to print
PAPER: WHITE WRITING, SUB. 20. INK: BLACK
FLAT SIZE: 216mm (8-1/2") x 279mm (11")
Date PERFORATE: None Revised proofs
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT requested

OMB No. 1545-0499
Form 5305-SEP Simplified Employee Pension—Individual
(Rev. December 2004) Retirement Accounts Contribution Agreement Do not file
Department of the Treasury (Under section 408(k) of the Internal Revenue Code) with the Internal
Internal Revenue Service Revenue Service

makes the following agreement under section 408(k) of the
(Name of employer) Internal Revenue Code and the instructions to this form.
Article I—Eligibility Requirements (check applicable boxes—see instructions)
The employer agrees to provide discretionary contributions in each calendar year to the individual retirement account or individual
retirement annuity (IRA) of all employees who are at least years old (not to exceed 21 years old) and have performed
services for the employer in at least years (not to exceed 3 years) of the immediately preceding 5 years. This simplified
employee pension (SEP) includes does not include employees covered under a collective bargaining agreement,
includes does not include certain nonresident aliens, and includes does not include employees whose total
compensation during the year is less than $450*.

Article II—SEP Requirements (see instructions)
The employer agrees that contributions made on behalf of each eligible employee will be:
A. Based only on the first $205,000* of compensation.
B. The same percentage of compensation for every employee.
C. Limited annually to the smaller of $41,000* or 25% of compensation.
D. Paid to the employee’s IRA trustee, custodian, or insurance company (for an annuity contract).

Employer’s signature and date Name and title

Instructions 1. Currently maintain any other qualified SEP: (1) employees covered by a collective
retirement plan. This does not prevent you bargaining agreement whose retirement
Section references are to the Internal from maintaining another SEP. benefits were bargained for in good faith by
Revenue Code unless otherwise noted. 2. Have any eligible employees for whom you and their union, (2) nonresident alien
employees who did not earn U.S. source
Purpose of Form IRAs have not been established. income from you, and (3) employees who
3. Use the services of leased employees received less than $450* in compensation
Form 5305-SEP (Model SEP) is used by an (described in section 414(n)). during the year.
employer to make an agreement to provide 4. Are a member of an affiliated service Contribution limits. You may make an
benefits to all eligible employees under a group (described in section 414(m)), a annual contribution of up to 25% of the
simplified employee pension (SEP) described controlled group of corporations (described in employee’s compensation or $41,000*,
in section 408(k). section 414(b)), or trades or businesses under whichever is less. Compensation, for this
Do not file Form 5305-SEP with the IRS. common control (described in sections 414(c) purpose, does not include employer
Instead, keep it with your records. and 414(o)), unless all eligible employees of contributions to the SEP or the employee’s
For more information on SEPs and IRAs, all the members of such groups, trades, or compensation in excess of $205,000*. If you
see Pub. 560, Retirement Plans for Small businesses participate in the SEP. also maintain a salary reduction SEP,
Business (SEP, SIMPLE, and Qualified Plans), 5. Will not pay the cost of the SEP contributions to the two SEPs together may
and Pub. 590, Individual Retirement contributions. Do not use Form 5305-SEP for not exceed the smaller of $41,000* or 25% of
Arrangements (IRAs). a SEP that provides for elective employee compensation for any employee.
contributions even if the contributions are
Instructions to the Employer made under a salary reduction agreement. You are not required to make contributions
Use Form 5305A-SEP, or a nonmodel SEP. every year, but when you do, you must
Simplified employee pension. A SEP is a contribute to the SEP-IRAs of all eligible
written arrangement (a plan) that provides you Note. SEPs permitting elective deferrals employees who actually performed services
with an easy way to make contributions cannot be established after 1996. during the year of the contribution. This
toward your employees’ retirement income. Eligible employees. All eligible employees includes eligible employees who die or quit
Under a SEP, you can contribute to an must be allowed to participate in the SEP. An working before the contribution is made.
employee’s traditional individual retirement eligible employee is any employee who: (1) is Contributions cannot discriminate in favor of
account or annuity (traditional IRA). You make at least 21 years old, and (2) has performed highly compensated employees. Also, you may
contributions directly to an IRA set up by or “service” for you in at least 3 of the not integrate your SEP contributions with, or
for each employee with a bank, insurance immediately preceding 5 years. You can offset them by, contributions made under the
company, or other qualified financial establish less restrictive eligibility Federal Insurance Contributions Act (FICA).
institution. When using Form 5305-SEP to requirements, but not more restrictive ones.
establish a SEP, the IRA must be a Model If this SEP is intended to meet the
traditional IRA established on an IRS form or Service is any work performed for you for top-heavy minimum contribution rules of
a master or prototype traditional IRA for any period of time, however short. If you are section 416, but it does not cover all your
which the IRS has issued a favorable opinion a member of an affiliated service group, a employees who participate in your salary
letter. You may not make SEP contributions controlled group of corporations, or trades or reduction SEP, then you must make minimum
to a Roth IRA or a SIMPLE IRA. Making the businesses under common control, service contributions to IRAs established on behalf of
agreement on Form 5305-SEP does not includes any work performed for any period those employees.
establish an employer IRA described in of time for any other member of such group, Deducting contributions. You may deduct
section 408(c). trades, or businesses. contributions to a SEP subject to the limits of
When not to use Form 5305-SEP. Do not Excludable employees. The following section 404(h). This SEP is maintained on a
use this form if you: employees do not have to be covered by the calendar year basis and contributions to the

* For 2005 and later years, this amount is subject to annual cost-of-living adjustments. The IRS announces the increase, if any, in a news release, in the Internal Revenue
Bulletin, and on the IRS website at www.irs.gov.
For Paperwork Reduction Act Notice, see page 2. Cat. No. 11825J Form 5305-SEP (Rev. 12-2004)

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I.R.S. SPECIFICATIONS TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
FORM 5305-SEP, PAGE 2 OF 2
MARGINS; TOP 13mm (1/2"), CENTER SIDES. PRINTS: HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20. INK: BLACK
FLAT SIZE: 216mm (8-1/2") x 279mm (11")
PERFORATE: None
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

Form 5305-SEP (Rev. 12-2004) Page 2

SEP are deductible for your tax year with or An employer is not required to make SEP occur before you reach age 59 ⁄1,2you may be
within which the calendar year ends. contributions. If a contribution is made, subject to a tax on early withdrawal.
Contributions made for a particular tax year however, it must be allocated to all eligible Excess SEP contributions. Contributions
must be made by the due date of your employees according to the SEP agreement. exceeding the yearly limitations may be
income tax return (including extensions) for The Model SEP (Form 5305-SEP) specifies withdrawn without penalty by the due date
that tax year. that the contribution for each eligible (plus extensions) for filing your tax return
employee will be the same percentage of
Completing the agreement. This agreement compensation (excluding compensation (normally April 15), but are includible in your
is considered adopted when: greater than $205,000*) for all employees. gross income. Excess contributions left in
your SEP-IRA after that time may have
● IRAs have been established for all your Your employer will provide you with a copy of adverse tax consequences. Withdrawals of
eligible employees; the agreement containing participation rules and those contributions may be taxed as
a description of how employer contributions premature withdrawals.
● You have completed all blanks on the may be made to your IRA. Your employer must
agreement form without modification; and also provide you with a copy of the completed Financial institution requirements. The
financial institution where your IRA is
● any contributions to your IRA.
You have given all your eligible employees Form 5305-SEP and a yearly statement showing maintained must provide you with a disclosure
the following information: statement that contains the following
All amounts contributed to your IRA by your information in plain, nontechnical language:
1. A copy of Form 5305-SEP. employer belong to you even after you stop 1. The law that relates to your IRA.
working for that employer.
2. A statement that traditional IRAs other 2. The tax consequences of various options
than the traditional IRAs into which employer Contribution limits. Your employer will concerning your IRA.
SEP contributions will be made may provide determine the amount to be contributed to 3. Participation eligibility rules, and rules on
different rates of return and different terms your IRA each year. However, the amount for the deductibility of retirement savings.
concerning, among other things, transfers and any year is limited to the smaller of $41,000* 4. Situations and procedures for revoking
withdrawals of funds from the IRAs. or 25% of your compensation for that year. your IRA, including the name, address, and
3. A statement that, in addition to the Compensation does not include any amount telephone number of the person designated
information provided to an employee at the that is contributed by your employer to your to receive notice of revocation. This
time the employee becomes eligible to IRA under the SEP. Your employer is not information must be clearly displayed at the
participate, the administrator of the SEP must required to make contributions every year or beginning of the disclosure statement.
furnish each participant within 30 days of the to maintain a particular level of contributions.
effective date of any amendment to the SEP, 5. A discussion of the penalties that may
a copy of the amendment and a written Tax treatment of contributions. Employer be assessed because of prohibited activities
explanation of its effects. contributions to your SEP-IRA are excluded concerning your IRA.
4. A statement that the administrator will from your income unless there are 6. Financial disclosure that provides the
give written notification to each participant of contributions in excess of the applicable limit. following information:
Employer contributions within these limits will
any employer contributions made under the not be included on your Form W-2. a. Projects value growth rates of your IRA
SEP to that participant’s IRA by the later of Employee contributions. You may make under various contribution and retirement
January 31 of the year following the year for regular IRA contributions to an IRA. However, schedules, or describes the method of
which a contribution is made or 30 days after the amount you can deduct may be reduced determining annual earnings and charges that
the contribution is made. or eliminated because, as a participant in a may be assessed.
Employers who have established a SEP SEP, you are covered by an employer b. Describes whether, and for when, the
using Form 5305-SEP and have furnished retirement plan. growth projections are guaranteed, or a
statement of the earnings rate and the terms
each eligible employee with a copy of the SEP participation. If your employer does not on which the projections are based.
completed Form 5305-SEP and provided the require you to participate in a SEP as a
other documents and disclosures described in condition of employment, and you elect not to c. States the sales commission for each
Instructions to the Employer and Information participate, all other employees of your year expressed as a percentage of $1,000.
for the Employee, are not required to file the employer may be prohibited from participating. In addition, the financial institution must
annual information returns, Forms 5500 or If one or more eligible employees do not provide you with a financial statement each
5500-EZ for the SEP. However, under Title I of participate and the employer tries to establish year. You may want to keep these statements
the Employee Retirement Income Security Act a SEP for the remaining employees, it could to evaluate your IRA’s investment performance.
of 1974 (ERISA), this relief from the annual cause adverse tax consequences for the
reporting requirements may not be available to participating employees. Paperwork Reduction Act Notice. You are
an employer who selects, recommends, or not required to provide the information
influences its employees to choose IRAs into An employer may not adopt this IRS Model requested on a form that is subject to the
which contributions will be made under the SEP if the employer maintains another Paperwork Reduction Act unless the form
SEP, if those IRAs are subject to provisions qualified retirement plan. This does not displays a valid OMB control number. Books
that impose any limits on a participant’s ability prevent your employer from adopting this IRS or records relating to a form or its instructions
to withdraw funds (other than restrictions Model SEP and also maintaining an IRS must be retained as long as their contents
imposed by the Code that apply to all IRAs). Model Salary Reduction SEP or other SEP. may become material in the administration of
For additional information on Title I However, if you work for several employers, any Internal Revenue law. Generally, tax
requirements, see the Department of Labor you may be covered by a SEP of one returns and return information are confidential,
regulation at 29 CFR 2520.104-48. employer and a different SEP or pension or as required by section 6103.
profit-sharing plan of another employer.
Information for the Employee The time needed to complete this form will
SEP-IRA amounts—rollover or transfer to vary depending on individual circumstances.
The information below explains what a SEP is, another IRA. You can withdraw or receive The estimated average time is:
how contributions are made, and how to treat funds from your SEP-IRA if, within 60 days of
your employer’s contributions for tax receipt, you place those funds in the same or Recordkeeping 1 hr., 40 min.
purposes. For more information, see Pub. 590. another IRA. This is called a “rollover” and Learning about the
can be done without penalty only once in any law or the form 1 hr., 35 min.
Simplified employee pension. A SEP is a 1-year period. However, there are no Preparing the form 1 hr., 41 min.
written arrangement (a plan) that allows an restrictions on the number of times you may
employer to make contributions toward your make “transfers” if you arrange to have these If you have comments concerning the
retirement. Contributions are made to a funds transferred between the trustees or the accuracy of these time estimates or suggestions
traditional individual retirement custodians so that you never have for making this form simpler, we would be
account/annuity (traditional IRA). possession of the funds. happy to hear from you. You can write to the
Contributions must be made to either a Internal Revenue Service, Tax Products
Model traditional IRA executed on an IRS Withdrawals. You may withdraw your Coordinating Committee, SE:W:CAR:MP:T:T:SP,
form or a master or prototype traditional IRA employer’s contribution at any time, but any 1111 Constitution Ave. NW, Washington, DC
for which the IRS has issued a favorable amount withdrawn is includible in your 20224. Do not send this form to this address.
opinion letter. income unless rolled over. Also, if withdrawals Instead, keep it with your records.

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