Ken is a self-employed architect in a small firm with four employees: himself, his office assistant, and two drafters, all of whom have worked for Ken full-time for the last four years. The office assistant earns $30,000 per year, and each drafter earns $40,000. Ken's net earnings from self-employment (after deducting all expenses and one-half of self-employment taxes) are $380,000. Ken is considering whether to establish a SEP plan and has a few questions. Assume that all the employees are at least 21 years old.
Required:
a. Is he eligible to establish a SEP plan?