A:

While salary deferral contributions to a savings incentive match plan for employees of small employers (SIMPLE) IRAs and SIMPLE 401(k)s are not subject to income tax withholding, they are subject to tax under the Federal Insurance Contributions Act (FICA), the Federal Unemployment Tax Act (FUTA) and the Railroad Retirement Act (RRTA).



Coincidentally, employer matching and nonelective contributions are not subject to FICA, FUTA or RRTA taxes.



To read more, visit Plans The Small Employer Can Establish, SIMPLE IRA Vs. SIMPLE 401(k ) and Introduction To Simple 401(k) Plans.



This question was answered by Denise Appleby
(Contact Denise)



RELATED FAQS

  1. What is the difference between income tax and capital gains tax?

    Understand the difference between a person's income tax and his capital gains tax. Learn when a person needs to pay taxes ...
  2. Which factors drive the marginal propensity to consume?

    Understand how a limited liability company is taxed. Learn the tax structure of a single-owner LLC versus a multi-owner LLC.
  3. What option strategies can I use to earn additional income when investing in the ...

    Discover how risk-averse investors need to build a retirement portfolio. The major factors are diversification and avoiding ...
  4. What are some of the arguments against a value added tax (VAT)?

    Discover some of the arguments against a value-added tax. Like other tax systems, the value-added tax has strengths and weaknesses.
RELATED TERMS
  1. Tax Deductible Interest

    A borrowing expense that a taxpayer can claim on a federal or ...
  2. Current Service Benefit

    The amount of pension benefit accrued by an employee who had ...
  3. Self Invested Personal Pension (SIPP)

    A tax-efficient retirement savings account available in Great ...
  4. Senior Move Manager

    Senior move managers (SMMs) help seniors downsize and relocate ...
  5. Elder Care

    Elder care, sometimes called elderly care, refers to services ...
  6. Deferred Tax Asset

    A deferred tax asset is an asset on a company's balance sheet ...

You May Also Like

Related Articles
  1. Professionals

    5 Signs That You Have a Lousy 401(k) ...

  2. Entrepreneurship

    Why Small Business Owners Need Financial ...

  3. Professionals

    How the Robo-Advisors Differ (& How ...

  4. Professionals

    Target Date Funds: More Popular, Cheaper ...

  5. Retirement

    Top 10 Stocks for Retirement Portfolios

Trading Center