If I want to start a SEP plan as an employer, do I have to add terminated employees?
You do not need to add terminated employees to the Honest Dollar software, but you may need to make a contribution to their SEP IRA at the end of the year.
The IRS treats a SEP as being in effect for the entire plan year, so that an employee’s full year compensation is counted, even if the SEP doesn’t get established until after the end of the plan year but before the employer’s tax-return due date for the plan year. Someone who would’ve been eligible to participate in the plan during a plan year but who left or was terminated before the SEP is established is still eligible for a contribution based on their compensation during the plan year.
For this case please consult your accountant of how to deliver the SEP funds as the employer.