Generally, any qualified retirement plan or IRA-based plan adopted by an employer must cover all eligible employees. Failure to do so could result in plan disqualification.
For example, suppose that a partnership company wishes to incorporate an IRA for its partners and a 401(k) plan for the employees. If the partnership adopts a simplified employee pension (SEP) IRA, the common-law employees who meet eligibility requirements should be allowed to participate in the SEP too. Participation should not be limited to only the partners in the partnership. For the 401(k) plan, employees may choose whether they want to make salary-deferral contributions; therefore, the partners simply could choose not to make salary-deferral contributions. However, caution must be exercised, as limited participation could result in the plan failing non-discrimination testing.
To be sure, you may want to have a tax attorney review your particular situation.
(To read more about how to set up a retirement plan for a small company, read Plans the Small Employer Can Establish, Establishing an SEP IRA and SIMPLE IRA vs. SIMPLE 401(k) Plans.)
This question was answered by Denise Appleby