1. Was your SARSEP established prior to
January 1, 1997, and subsequently
amended for current law?
No new SARSEPs can be established after 1996, however,
existing plans need to be updated for new law.
(More)
2. Do you have 25 or fewer eligible
employees?
Only businesses with 25 or fewer eligible employees can
contribute to a SARSEP.
(More)
3. Are all eligible employees (those who
are at least age 21, worked for you in at
least 3 of the last 5 years and have
received at least $600 during the year in
compensation) participating in the plan?
Employees of other businesses you or your family members
own may have to be treated as employees when determining
who is an eligible employee under the SARSEP.
(More)
4. Are you determining each eligible
employee’s compensation using the
definition in your SARSEP document?
A plan’s definition of compensation must satisfy applicable
rules for determining the amount of contributions.
(More)
5. Are all employee elective deferrals
within the Internal Revenue Code
Section 402(g) limit for the calendar
year ($18,500 in 2018) and have any
excess deferrals been distributed?
Employees age 50 or over may make additional catch-up
contributions of up to $6,000 in 2018
(More)
6. Do 50% or more of all eligible
employees make elective deferrals?
At least half of your eligible employees must make elective
deferrals to the SARSEP.
(More)
7. Are total contributions (employee
elective deferrals and nonelective
employer contributions) limited as
required by the Internal Revenue Code?
For 2018 contributions are limited to the lesser of 25% of
compensation or $55,000. SARSEPs don’t permit employers to
make matching contributions to participants’ accounts.
(More)
8. Did you deposit employee elective
deferrals timely?
Employee elective deferrals must be remitted to the
appropriate financial institution as soon as possible, but no
later than 15 days following the month in which the employee
would have otherwise received the money.
(More)
9. Did the SARSEP pass the annual
deferral percentage test?
The amount deferred each year by each highly
compensated employee as a percentage of pay (the deferral
percentage) can’t exceed 125% of the average deferral
percentage of all eligible nonhighly compensated employees.
(More)
10. Have you made required top-heavy
minimum contributions to the SARSEP?
Refer to your plan document for information. Most plans are
deemed top-heavy, but some plans require annual testing.
(More)
For Business Owner’s Use
(DO NOT SEND THIS WORKSHEET TO THE IRS)
Every year it’s important to review the requirements for operating your Salary Reduction Simplified Employee
Pension (SARSEP) plan. Use this checklist to help you keep your plan in compliance with many important rules.
For additional information (including examples) on how to find, fix and avoid each mistake click on “(More).”
See www.irs.gov/retirement and click on “Types of Retirement Plans” for Fix-It Guides and other resources for
SARSEPs and other plan types.
If you answered “N
o” to any of the above questions,
you may have a mistake in the operation
of your SARSEP plan.
This list is only a guide to a more compliant plan, so answering "Yes" to each question may not
mean your plan is 100% compliant. Many mistakes can be corrected easily, without penalty and without notifying
the IRS.
■ contact your tax advisor ■ visit the IRS at www.irs.gov/retirement ■ call the IRS at 877-829-5500
This checklist isn’t a complete description of all plan
requirements, and shouldn’t be used as a substitute for
a complete plan review.
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S
ARSEP CHEC
ARSEP CHEC
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Publication 4286 (Rev. 8-2018) Catalog Number 37998P Department of the Treasury Internal Revenue Service www.irs.gov
