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Official form guide
Form 5305-SEP: Simplifies Employee Pension-Individual Retirement Accounts Contribution Agreement
IRS Form 5305-SEP is a Simplified Employee Pension (SEP) contribution agreement that employers use to set up discretionary IRA contributions for eligible employees. Contributions are limited to the lesser of $41,000 or 25% of compensation and must be made by the due date of the employer’s income tax return, including extensions.
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IRS Form 5305-SEP - Simplifies Employee Pension-Individual Retirement Accounts Contribution Agreement
IRS Form 5305-SEP is a Simplified Employee Pension (SEP) contribution agreement that employers use to set up discretionary IRA contributions for eligible employees. Contributions are limited to the lesser of $41,000 or 25% of compensation and must be made by the due date of the employer’s income tax return, including extensions.
Risk Radar
Scan points- 1Do not send Form 5305-SEP to the IRS; it must be kept with your records.
- 2Omitting the employer’s signature and date on the agreement.
- 3Leaving the employer’s name blank or incomplete.
- 4Failing to state the required employee age (21) and service (3 of 5 years) criteria.
- 5Using a contribution limit higher than $41,000 or 25% of compensation.
Plain English
This form lets an employer create a SEP, a retirement plan that puts money into each eligible worker’s IRA. The employer decides how much to contribute, but the amount can’t exceed $41,000 or 25% of pay. The agreement is kept for records, not sent to the IRS.
Submission Date
- Filing date: 2012-07-17 00:00:00
- Preparation window: collect IDs, supporting records, and signatures in advance.
- Final review: verify names, dates, and required fields before submission.
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Glossary Terms
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What this form is for
- Use this form when establishing a Simplified Employee Pension (SEP) for eligible employees and contributions will be made to their IRA trustees.
- Do not use it when you already maintain another qualified retirement plan or when the SEP would allow elective employee contributions.
- Check Form 5305A-SEP instead when the SEP must permit elective employee contributions.
Form selector
Use this form or another form?
SEP that permits elective employee contributions
Allows salary‑reduction contributions which Form 5305-SEP prohibits
✓ Confirm the plan includes elective deferrals
SEP established after 1996 that includes elective deferrals
Only Form 5305A-SEP can be used for post‑1996 elective‑deferral SEPs
✓ Verify the plan’s start date is after 1996
SEP that must meet top‑heavy minimum contribution rules while covering all employees
Ensures minimum contributions are made to all eligible IRAs
✓ Check that all eligible employees are included
Deadline or filing window
Not stated in the official source.
Checklist
What you need before filling it out
Employer signature and date
Employer’s signature and date · Signature block on Form 5305-SEP
Employee eligibility criteria
Age and service requirements · Eligibility section on Form 5305-SEP
Contribution limit calculation
Compensation amount and percentage · Contribution limit section on Form 5305-SEP
Payment destination for contributions
IRA trustee, custodian, or insurance company details · Payment section on Form 5305-SEP
Exclusion of certain employees
List of excluded employee categories · Exclusion clause on Form 5305-SEP
Before you submit
- 1Confirm employer’s signature and date are present on the form
- 2Confirm all eligible employees are at least 21 years old
- 3Confirm each eligible employee has performed service in at least 3 of the preceding 5 years
- 4Confirm the contribution percentage is the same for every employee
- 5Confirm the contribution amount does not exceed the lesser of $41,000 or 25% of compensation
- 6Confirm contributions are based only on the first $205,000 of compensation
- 7Confirm no excluded employees (collective bargaining, nonresident alien, compensation <$450) are listed
How to file this form
- 1Determine which employees meet the eligibility criteria
- 2Calculate each employee’s contribution amount using the same percentage and the $41,000 or 25% limit
- 3Complete Form 5305-SEP with employer information, contribution details, and payment destination
- 4Obtain the employer’s signature and date on the form
- 5Retain the completed Form 5305-SEP with your records as proof of filing
Known limitations
- 1Do not use Form 5305-SEP if the employer currently maintains any other qualified retirement plan.
- 2Do not use Form 5305-SEP if the employer is a member of an affiliated service group, controlled group, or trades or businesses under common control unless all eligible employees of all members participate.
- 3Do not use Form 5305-SEP for a SEP that provides for elective employee contributions; use Form 5305A-SEP or a non‑model SEP instead.
- 4Do not use Form 5305-SEP for SEPs that permit elective deferrals, which cannot be established after 1996.
Field map
Compact field-by-field guide
General Info
2 items
Full legal name and taxpayer identification number (SSN or EIN).
Current mailing address.
Details
2 items
Complete all applicable sections of this form according to the official IRS instructions.
Enter the relevant dollar amount if this form involves tax calculation.
Certification
1 items
Read and acknowledge any certifications required by this form.
Signatures
1 items
Sign and date. Unsigned forms cannot be processed.
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Fillable formOpen in Editor->The source does not provide an edition or revision date, and does not indicate whether this is the latest version or what changes were made.
What changed or needs a fresh check
- Edition date — Not stated in the official source
- Fee — Not stated in the official source
- Mailing address — Not stated in the official source
- Signature — confirm employer’s signature and date are present
Quick Facts
Downloads
After you file
- 1Sign the agreement before retaining it.
- 2Keep the completed Form 5305-SEP with the employer’s business records.
- 3Do not send the form to the IRS address; it is for internal record‑keeping only.
- 4Retain the form for the period required by general record‑keeping rules for tax documents.
- 5If an error is discovered, amend the agreement and keep the revised version with the original records.
Sources
- SRCForm p.1 — Do not use this form if you currently maintain any other qualified retirement plan.
- SRCForm p.1 — Do not use this form if you are a member of an affiliated service group, controlled group, or trades or businesses under common control unless all eligible employees of all members participate.
- SRCForm p.1 — Do not use Form 5305-SEP for a SEP that provides for elective employee contributions; use Form 5305A-SEP or a nonmodel SEP.
- SRCForm p.1 — SEPs permitting elective deferrals cannot be established after 1996.
- SRCForm p.1 — Employees covered by a collective bargaining agreement are excluded from coverage.
- SRCForm p.1 — Eligible employees must be at least 21 years old.
- SRCForm p.1 — Certain nonresident alien employees are excluded from coverage.
- SRCForm p.1 — Do not file Form 5305-SEP with the IRS; keep it with your records.
- SRCForm p.1 — Contributions are based only on the first $205,000 of compensation.
- SRCForm p.2 — Do not send this form to the IRS address; retain it with your records.
Common confusion points
Do I have to include employees covered by a collective bargaining agreement?
The form excludes those employees from coverage.
→ Verify that any collective‑bargaining employees are listed as excluded in the plan documentation.
Can I set the employee age eligibility lower than 21?
Form 5305-SEP requires eligible employees to be at least 21 years old.
→ Confirm the eligibility age on the form matches 21 years.
May I make contributions for nonresident alien employees?
Certain nonresident alien employees are excluded from coverage.
→ Check each employee’s residency status and exclude nonresident aliens without U.S. source income.
Do I need to file this form with the IRS?
The form expressly states it should not be filed with the IRS; it is kept for records.
→ Ensure the form remains in the employer’s internal files and is not mailed to the IRS.
Can I use this form for a plan that allows salary‑reduction (elective) contributions?
The form is not for SEPs with elective employee contributions; Form 5305A‑SEP is required.
→ Confirm the plan does not permit elective contributions before using Form 5305‑SEP.
Is there a limit on the compensation amount used to calculate contributions?
Contributions are based only on the first $205,000 of compensation.
→ Verify that compensation used for each employee does not exceed $205,000.
Workflow map
Related forms and next steps
Before
Current
After
Often used with
⚠ If something goes wrong
- Form 5305A-SEP – switch to this form if the plan needs to permit employee salary‑reduction contributions.
Questions about IRS Form 5305-SEP
What is IRS Form 5305-SEP used for?
This form lets an employer create a SEP, a retirement plan that puts money into each eligible worker’s IRA. The employer decides how much to contribute, but the amount can’t exceed $41,000 or 25% of pay. The agreement is kept for records, not sent to the IRS.
Who must file IRS Form 5305-SEP?
Employers who want to establish a Simplified Employee Pension (SEP) for their eligible employees must complete IRS Form 5305-SEP.
What information does IRS Form 5305-SEP require?
The form records the employer’s name, signature, date, and the contribution agreement details, including eligibility criteria and contribution limits such as the $205,000 compensation base and the $41,000 or 25% cap.
Where do I file IRS Form 5305-SEP?
Do not file Form 5305-SEP with the IRS; retain the completed agreement with your records.
How do I complete IRS Form 5305-SEP?
First, the employer enters its name and signs and dates the agreement. Next, it confirms the eligibility rules (employees at least 21 years old and with at least 3 years of service in the prior 5 years). Then the employer specifies that contributions will be based on the first $205,000 of compensation, use the same percentage for all, and be limited to the smaller of $41,000 or 25% of compensation. Finally, the signed form is kept on file and not sent to the IRS.
Do I have to include employees covered by a collective bargaining agreement?
The form excludes those employees from coverage. Verify that any collective‑bargaining employees are listed as excluded in the plan documentation.
Can I set the employee age eligibility lower than 21?
Form 5305-SEP requires eligible employees to be at least 21 years old. Confirm the eligibility age on the form matches 21 years.
May I make contributions for nonresident alien employees?
Certain nonresident alien employees are excluded from coverage. Check each employee’s residency status and exclude nonresident aliens without U.S. source income.
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