Which of the following statements about a simplified employee pension (SEP) plan is correct?

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The statement about a simplified employee pension (SEP) plan requiring employer contributions on a nondiscriminatory basis is accurate. Under the SEP rules, employers must make contributions uniformly for all eligible employees, which means the contributions cannot favor certain employees over others. This is a critical aspect of SEPs, as it ensures fairness and adherence to nondiscrimination rules.

SEPs allow employers to contribute to their employees' retirement savings in a straightforward manner, while also benefiting from the tax advantages associated with these plans. The contributions made by the employer are typically based on a percentage of the employee's compensation, but all eligible employees must receive the same percentage of their compensation, thus fulfilling the requirement for nondiscrimination.

This reflects the fundamental principle of equity in retirement plan contributions, ensuring that all participating employees, regardless of their income level or other characteristics, receive the same treatment in terms of employer contributions.