Can we exclude a seasonal worker from our SEP simply because they worked part time?
A SEP cannot exclude an employee solely because the worker is seasonal or part time.
By AE Tax Advisors Team · Updated October 29, 2026
A SEP cannot exclude an employee solely because the worker is seasonal or part time. Eligibility turns on the plan's permitted age, service and compensation conditions, and the plan may be more generous than statutory minimums. Service in a year can count even when hours are limited.
A specific business-owner situation
A farm business has a seasonal worker who returns for several short harvest periods. The employer cannot decide eligibility from the absence of full-time status alone.
Illustrative example, not a client result.
What to establish before filing
- Read the SEP's eligibility provisions.
- Track service years and compensation.
- Apply consistent contribution rules to eligible employees.
Which fact changes the answer?
Intermittent service across multiple years differs from a brand-new hire. The required service history must be tested under this plan's terms.
A mistake to avoid
Do not import a 1,000-hour rule from another retirement arrangement into a SEP without support.
Records that support the decision
- SEP adoption agreement.
- Annual service records.
- Compensation and contribution schedules.
The decision to document
Have the administrator determine eligibility before funding an owner contribution that omits required employee contributions.
Business-owner tax planning and preparation scope · Discuss advisory scope with AE
Related questions
- An owner received a required minimum distribution. Can we roll it into another retirement account?
- I still work for my company. Does that automatically let me delay its retirement-plan RMDs?
Sources and editorial context
General educational information prepared with AI assistance. No individual professional review is claimed. Apply the relevant tax-year rules to the actual records. Editorial policy · AI disclosure.