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Form 5305-SEP: Simplifies Employee Pension-Individual Retirement Accounts Contribution Agreement
IRS Form 5305-SEP is the Simplifies Employee Pension—Individual Retirement Accounts Contribution Agreement, used by employers to agree to SEP contributions for employees under section 408(k) of the Internal Revenue Code. The employer must ensure eligible employees are at least 21 years old.
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IRS Form 5305-SEP - Simplifies Employee Pension-Individual Retirement Accounts Contribution Agreement
IRS Form 5305-SEP is the Simplifies Employee Pension—Individual Retirement Accounts Contribution Agreement, used by employers to agree to SEP contributions for employees under section 408(k) of the Internal Revenue Code. The employer must ensure eligible employees are at least 21 years old.
Risk Radar
Scan points- 1Do not use this form if you currently maintain any other qualified retirement plan.
- 2Failing to ensure all eligible employees receive a copy of the completed Form 5305-SEP.
- 3Not listing an employer who participates in a group that requires SEP coverage (414(m), 414(b), or 414(c) and 414(o)).
- 4Stating eligibility requirements that are more restrictive than the minimums stated on Form 5305-SEP.
- 5Failing to specify that contributions are based only on the first $205,000* of compensation.
Plain English
This form lets an employer formally state their agreement to contribute money toward their employees' retirement savings plans (IRAs). It establishes rules about who qualifies for these contributions and how much money will be put into each employee's account annually. By completing this, the employer simplifies the process of making SEP contributions.
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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What this form is for
- Use this form when an employer wishes to document that contributions made on behalf of eligible employees will be based only on the first $205,000* of compensation, at the same percentage for every employee, limited annually to the smaller of $41,000* or 25% of compensation, and paid to the employee’s IRA trustee/custodian.
- Do not use this form if the employer currently maintains any other qualified retirement plan.
- Check Form 5305A-SEP instead when the SEP provides for elective employee contributions even if those contributions are made under a salary reduction agreement.
Form selector
Use this form or another form?
Employer is part of an affiliated service group
All eligible employees of all members must participate in the SEP.
✓ Verify participation across all entities.
SEP covers specific nonresident aliens
These are alien employees who did not earn U.S. source income from the employer.
✓ Confirm the status of each covered alien employee.
Not stated in the official source
Employer does not contribute every year
If contributions are made, they must go to all eligible employees who performed services during that year.
✓ Ensure contribution timing aligns with service dates.
Not stated in the official source
Deadline or filing window
The SEP is maintained on a calendar year basis, and contributions made for that tax year must be submitted by the due date of the employer's income tax return. There is no separate extension mentioned for filing the Form 5305-SEP itself, only for making the required contributions.
Checklist
What you need before filling it out
Eligibility Requirement
Employee must be at least 21 years old AND have performed service for 3 of the immediately preceding 5 years · Form p.1
Contribution Limit
The smaller of $41,000* or 25% of compensation · Form p.1
Deduction Basis
Contributions are deductible subject to limits of section 404(h) · Form p.1
Rollover Window
Within 60 days of receipt · Form p.2
IRS Mailing Address
Tax Products Coordinating Committee, SE:W:CAR:MP:T:T:SP, 1111 Constitution Ave. NW, Washington, DC 20224 · Form p.2
Non-Use Condition
Employer currently maintains any other qualified retirement plan · Form p.1
Before you submit
- 1Confirm that all eligible employees meet the minimum age of 21.
- 2Verify that each employee has performed service for at least 3 of the immediately preceding 5 years.
- 3Check that the stated contribution basis is based only on the first $205,000* of compensation.
- 4Confirm that contributions are limited annually to the smaller of $41,000* or 25% of compensation.
- 5Ensure the employer's signature and date are present on Form 5305-SEP.
- 6Verify that this SEP does not provide for elective employee contributions (if it does, use Form 5305A-SEP).
- 7Confirm that the form is kept with records rather than being sent to the IRS.
How to file this form
- 1Complete all required fields on Form 5305-SEP using the current edition (12/04).
- 2Determine if any exceptions apply, such as covering collective bargaining agreement employees or nonresident aliens.
- 3Sign and date Form 5305-SEP to finalize the employer's agreement regarding contributions.
- 4Keep the completed Form 5305-SEP with your business records instead of mailing it to the IRS.
Known limitations
- 1Do not use Form 5305-SEP if the employer currently maintains any other qualified retirement plan.
- 2Do not use this form if the employer is a member of an affiliated service group, a controlled group of corporations, or trades or businesses under common control unless all eligible employees of all members participate in the SEP.
- 3Do not use Form 5305-SEP for a SEP that provides for elective employee contributions even if those contributions are made under a salary reduction agreement; instead, use Form 5305A-SEP or a nonmodel SEP.
- 4The form does not apply to employees covered by a collective bargaining agreement whose retirement benefits were bargained for in good faith and who do not meet the other eligibility criteria (though they can be excluded under specific circumstances listed later).
- 5The form does not apply to nonresident alien employees who did not earn U.S. source income from the employer.
- 6The form does not apply to employees whose total compensation during the year is less than $450.
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.
Almost done reviewing the fields?
Fillable formOpen in Editor->The current edition on file is 12/04. The official source does not point to a specific 'latest information' page, but it provides comprehensive details regarding the form's use and requirements.
What changed or needs a fresh check
- Edition date — confirm the revision date reads 12/04.
- Fee — Not stated in the official source.
- Mailing address — verify the address is Tax Products Coordinating Committee, SE:W:CAR:MP:T:T:SP, 1111 Constitution Ave. NW, Washington, DC 20224.
- Signature — ensure the employer's signature and date are present on Form 5305-SEP.
Quick Facts
Downloads
After you file
- 1Keep Form 5305-SEP with your records after completing it, as it should not be filed with the Internal Revenue Service (IRS).
- 2Confirm that contributions made on behalf of eligible employees are based only on the first $205,000 of compensation.
- 3Ensure contributions are limited annually to the smaller amount between $41,000 or 25% of the employee's compensation.
- 4Verify that all eligible employees who actually performed services during the contribution year receive a contribution (this includes those who die or quit before the contribution is made).
- 5If an early withdrawal occurs before age 59 1/2, expect potential tax on that early withdrawal.
Sources
- SRCForm 5305-SEP is the Simplifies Employee Pension—Individual Retirement Accounts Contribution Agreement; it governs under section 408(k) of the Internal Revenue Code ([Form p.1]).
- SRCThe employer must provide contributions to employees who are at least 21 years old and have performed service for at least 3 of the immediately preceding 5 years ([Form p.1]).
- SRCContributions must be based only on the first $205,000 of compensation ([Form p.1]).
- SRCThe employer agrees that contributions will be paid to the employee’s IRA trustee, custodian, or insurance company (for an annuity contract) ([Form p.1]).
- SRCDo not file Form 5305-SEP with the Internal Revenue Service; instead, keep it with your records ([Form p.1] and [Form p.2]).
- SRCThe form does not apply if you currently maintain any other qualified retirement plan ([Form p.1]).
- SRCFor mailing inquiries (though do not send it there), write to the IRS at 1111 Constitution Ave. NW, Washington, DC 20224 ([Form p.2]).
Common confusion points
Who counts as an eligible employee?
An employee must be at least 21 years old AND have performed service for the employer in at least 3 of the immediately preceding 5 years.
→ Check Article I—Eligibility Requirements and ensure requirements are not more restrictive than these.
What is 'service'?
Service is any work performed for the employer for any period of time, however short. If part of a group, it includes service for any other member of that group/trade/business.
→ Review Instructions to the Employer regarding definitions within your specific business structure.
Do I have to contribute every year?
No, the employer is not required to make contributions annually, but when they do, they must cover all eligible employees who worked during that year.
→ Check Form 5305-SEP instructions; this applies even if you skip a contribution year.
Where do I send this form?
Do not write or mail the completed Form 5305-SEP to the IRS address (Tax Products Coordinating Committee, SE:W:CAR:MP:T:T:SP, 1111 Constitution Ave. NW, Washington, DC 20224).
→ Keep it with your records instead of mailing it.
What if I have an elective contribution?
If the SEP provides for elective employee contributions (even under a salary reduction agreement), you must use Form 5305A-SEP or a nonmodel SEP.
→ Check Article II—SEP Requirements to confirm the type of plan structure.
Does this form cover everyone?
It does not have to cover employees who will not pay the cost of the SEP contributions, nor does it apply if you have other qualified retirement plans in place.
→ Review the list under 'Excludable employees' on Form 5305-SEP.
Workflow map
Related forms and next steps
Before
Current
After
Often used with
⚠ If something goes wrong
- If your plan structure is complex and needs verification beyond what Form 5305-SEP covers, reference Pub. 560 (Retirement Plans for Small Business).
Questions about IRS Form 5305-SEP
What is IRS Form 5305-SEP used for?
This form lets an employer formally state their agreement to contribute money toward their employees' retirement savings plans (IRAs). It establishes rules about who qualifies for these contributions and how much money will be put into each employee's account annually. By completing this, the employer simplifies the process of making SEP contributions.
Who must file IRS Form 5305-SEP?
The employer must file IRS Form 5305-SEP; specifically, the name listed on the form acts as the entity agreeing to provide discretionary contributions.
What information does IRS Form 5305-SEP require?
The agreement specifies details such as the minimum required employee age (21 years old) and service time (at least 3 of the immediately preceding 5 years). It also outlines contribution parameters like being based only on the first $205,000* of compensation.
When is IRS Form 5305-SEP due?
Contributions must be made by the due date of the employer's income tax return (including extensions) for that specific calendar year.
Where do I file IRS Form 5305-SEP?
The form does not need to be filed with the Internal Revenue Service Department of the Treasury; instead, the employer keeps it with their records. However, if using this form and providing disclosures, the employer avoids filing Forms 5500 or 5500-EZ.
How do I complete IRS Form 5305-SEP?
The employer must fill in the Name and title fields before signing and dating the form. The agreement dictates that contributions are based on specific criteria, such as being limited annually to the smaller of $41,000* or 25% of compensation. All eligible employees must receive a copy of this completed Form 5305-SEP.
What happens if IRS Form 5305-SEP is filed incorrectly?
If the agreement is incorrect, contributions may not be deductible subject to the limits of section 404(h), or the SEP might fail to meet top-heavy minimum contribution rules if coverage is incomplete.
Who counts as an eligible employee?
An employee must be at least 21 years old AND have performed service for the employer in at least 3 of the immediately preceding 5 years. Check Article I—Eligibility Requirements and ensure requirements are not more restrictive than these.
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