Salary Reduction Simplified Employee Pension Plan (SARSEP)


A SARSEP is a Simplified Employee Pension (SEP) plan that:

  • Was established before 1997.
  • Permits employee salary reduction contributions.
  • Meets the following participation requirements annually based on all eligible employees (even those hired after 1996):
    • At least 50% of eligible employees must choose to make employee salary reduction contributions for the year.
    • Had no more than 25 employees who were eligible to participate at any time during the preceding year.
  • May need to be amended for current law changes.

Participate in a SARSEP Plan
Benefits of participation, plan contributions, effects of withdrawing money from the plan and more.

Operate and Maintain a SARSEP Plan
Periodically review the plan, update for recent law changes, nondiscrimination testing requirements and more.

Correct SARSEP Plan Errors
Find, fix and avoid plan errors.

Terminate a SARSEP Plan
Requirements for ending a SARSEP plan.

Additional resources