Give your employees an added benefit and peace of mind—all without taking on large costs and administrative burdens. A SIMPLE IRA provides small companies an alternative to complex, tax-qualified retirement plans.
As your employee makes elective plan contributions, you simply match theirs. And there's less reporting requirements involved. Best of all, your company's contributions are tax deductible.
- Summary
Requirements
- Available for businesses with no more than 100 employees who earned at least $5,000 in compensation during the preceding year
- Businesses cannot maintain another employer sponsored retirement plan
- Withdrawals before age 59½ subject to penalty
Benefit for employer
- Gain your employees trust and respect
- Generally cheaper and less complex than tax-qualified plans
- Not subject to special 401(k) nondiscrimination test or top-heavy rules
- Less restrictive than individual IRAs
- Contributions are fully and currently tax deductible
- Employees make contributions to which you match*
- Establish a SIMPLE plan as an IRA for each employee or as part of a 401(k) plan
Benefits for employees
- Fully vested, tax-deferred retirement
- Available for self-employed individuals and company employees
- Employees 50+ may make "catch-up" contributions
- Employer makes matching contributions
- Employer contributions are not includable in employee incomes for income-tax purposes
- Tax-free until time of withdrawal
- Annual contributions can be made to a separate IRA up to the annual contribution limit
*Matching contributions are required up to 3% of participating employees' compensation or a nonelective contribution of 2% is required for all eligible employees.
