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 comprehensive income and gross income?

    Learn the specifics of both comprehensive income and gross income, how they are legally defined, and the primary difference ...
  2. What tax breaks are afforded to a qualifying widow?

    Understand the special qualifying widow/widower status, the requirements for this filing status and the special tax benefits ...
  3. How is income taxed on prorated salary?

    Understand the various tax brackets the IRS uses to calculate federal income tax. Learn how income tax is calculated on a ...
  4. How can I tell which of my business expenses count as write-offs?

    Learn the basic concept behind what business expenses can be written off, along with specific examples of some basic and ...
RELATED TERMS
  1. Duty Free

    Goods that international travelers can purchase without paying ...
  2. Qualified Longevity Annuity Contract

    A Qualified Longevity Annuity Contract (QLAC) is a deferred annuity ...
  3. See-Through Trust

    A trust that is treated as the beneficiary of an individual retirement ...
  4. Backdoor Roth IRA

    A method that taxpayers can use to place retirement savings in ...
  5. Tax Deductible Interest

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

    The amount of pension benefit accrued by an employee who had ...

You May Also Like

Related Articles
  1. Retirement

    How to Battle Inflation During Retirement

  2. Retirement

    Does it Make Sense to Have an MLP in ...

  3. Retirement

    Top Tips for Rebalancing 401(k) Assets

  4. Professionals

    Few Target-Date Managers Invest in Their ...

  5. Fundamental Analysis

    Should You Hire an Advisor or DIY Your ...

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!