5305-SEP

Simplifies Employee Pension-Individual Retirement Accounts Contribution Agreement

Agency
IRS
Revision
Rev. December 2004
Fillable fields
7
Pages
2
Official source
IRS form page
Checked
October 21, 2026
Fill 5305-SEP online
Page 1 of form 5305-SEP

Form 5305-SEP: Simplified Employee Pension-IRA Contribution Agreement

Form 5305-SEP, the Simplified Employee Pension-Individual Retirement Accounts Contribution Agreement, is what the IRS calls the Model SEP. The instructions say it is used by an employer to make an agreement to provide benefits to all eligible employees under a simplified employee pension (SEP) described in section 408(k).

Under a SEP, the employer contributes to a traditional IRA set up by or for each employee with a bank, insurance company or other qualified financial institution. The form has the employer's name, Article I on eligibility, Article II on SEP requirements and the employer's signature, followed by Instructions to the Employer and Information for the Employee.

The form says "Do not file Form 5305-SEP with the IRS. Instead, keep it with your records." This is the December 2004 revision. Amounts marked with an asterisk are, as the form says, subject to annual cost-of-living adjustments for 2005 and later years. You can fill it out free in your browser on this page and download the result without an account.

Top of page 1 of Form 5305-SEP: Simplified Employee Pension-IRA Contribution Agreement, as printed by IRS

What's on Form 5305-SEP

Employer name

The opening line where the employer's name goes before the words "makes the following agreement under section 408(k)."

Article I: eligibility

Blanks for the minimum age (not to exceed 21) and years of service (not to exceed 3 of the preceding 5), and boxes for three groups of employees.

Article II: SEP requirements

Four items, A to D, on the compensation used, the same percentage for every employee, the annual limit, and payment to the employee's IRA trustee, custodian or insurance company.

Signature

The employer's signature and date, and the signer's name and title.

Instructions to the Employer

Who may not use the form, eligible and excludable employees, contribution limits, deducting contributions and completing the agreement.

Information for the Employee

What a SEP is, contribution limits, tax treatment, rollovers and transfers, withdrawals, excess contributions and financial institution requirements.

How to fill out Form 5305-SEP

  1. 1

    Employer name

    Enter the name of the employer on the opening line.

  2. 2

    Article I age and service

    Enter the minimum age and the years of service. The instructions say the employer can set less restrictive eligibility requirements than age 21 and 3 of the preceding 5 years, but not more restrictive ones.

  3. 3

    Article I boxes

    Check includes or does not include for employees under a collective bargaining agreement, certain nonresident aliens, and employees paid less than $450* during the year.

  4. 4

    Article II

    Review requirements A to D. They have no blanks and apply to contributions for each eligible employee.

  5. 5

    Sign

    Sign and date, and enter the signer's name and title on the line below Article II.

  6. 6

    Give employees the information

    The instructions say the agreement is adopted when IRAs exist for all eligible employees, all blanks are filled, and each eligible employee has a copy of the form and the statements the instructions list.

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Where it goes, timing and limits

Where it goes

Nowhere. The form says "Do not file Form 5305-SEP with the IRS. Instead, keep it with your records."

Annual returns

The instructions say employers that set up a SEP with this form and give employees the copies and disclosures described are not required to file Forms 5500 or 5500-EZ for the SEP, with an ERISA Title I exception.

Contribution timing

The instructions say contributions for a particular tax year are made by the due date of the employer's income tax return (including extensions) for that tax year.

Contribution limits

This revision prints the smaller of $41,000* or 25% of compensation, using compensation up to $205,000*. The asterisk note says these amounts are subject to annual cost-of-living adjustments for 2005 and later years.

Notices to participants

The instructions say the administrator gives each participant written notice of employer contributions by the later of January 31 of the following year or 30 days after the contribution.

Amendments

The instructions say each participant gets a copy of any amendment and a written explanation of its effects within 30 days of the amendment's effective date.

Related forms

Who uses Form 5305-SEP?

  • Employers setting up a SEP

    The instructions say the form is used by an employer to make an agreement to provide benefits to all eligible employees under a SEP.

  • Eligible employees

    The form says the employer provides each eligible employee a copy of the completed Form 5305-SEP and a yearly statement showing any contributions to the employee's IRA.

  • Financial institutions

    The institution where the IRA is kept gives the employee a disclosure statement in plain, nontechnical language and a financial statement each year.

  • Not for employers with other plans

    The instructions list cases where the form is not used, such as an employer that currently maintains any other qualified retirement plan or uses leased employees.

  • Not for salary reduction SEPs

    The form is not used for a SEP that provides for elective employee contributions. The instructions point to Form 5305A-SEP or a nonmodel SEP.

The employer completes and signs the agreement. Eligible employees and the financial institutions that hold their IRAs receive information under it.

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Questions about Form 5305-SEP

Do I send Form 5305-SEP to the IRS?

No. The form says "Do not file Form 5305-SEP with the IRS. Instead, keep it with your records."

Who signs Form 5305-SEP?

The employer. The form has one line for the employer's signature and date, plus the signer's name and title.

Can an employer with another retirement plan use it?

The instructions say not to use the form if the employer currently maintains any other qualified retirement plan. That does not prevent maintaining another SEP.

Does Form 5305-SEP allow salary reduction contributions?

No. The instructions say not to use it for a SEP that provides for elective employee contributions, and to use Form 5305A-SEP or a nonmodel SEP instead.

Are contributions required every year?

The instructions say the employer is not required to make contributions every year, but contributions that are made go to the SEP-IRAs of all eligible employees who performed services that year.

Are the dollar amounts on the form current?

The December 2004 revision prints $41,000*, $205,000* and $450*. Its note says these are subject to annual cost-of-living adjustments, announced in a news release, the Internal Revenue Bulletin and on www.irs.gov.

Do SEP contributions appear on Form W-2?

The form says employer contributions within the limits will not be included on the employee's Form W-2.