SEP IRA Rules : As with any other retirement plan, SEP IRAs are governed by certain rules which include:

• Employees cannot make any contributions, and no other qualified retirement plans are allowed
• There are contribution limits, although they are much higher, but the percentage of salary contributed is flexible
• All eligible employees over the age of 21 must receive the same percentage as contribution
• Employees must have been employed for three of the previous five years, and earn more than the minimum compensation ($600 for 2015)
• Employers can exclude employees if retirement benefits were bargained for as part of a union, or for non-resident alien employees not earning U.S. wages
• Withdrawals made before 59 ½ years of age are taxable as regular income and subject to an early withdrawal penalty (10%)
• Participants must start taking the required minimum distributions once they are 70 ½ years old
• No catch-up contributions or elective deferrals