Savings Incentive Match Plan For Employees Of Small Employers - SIMPLE

AAA

DEFINITION of 'Savings Incentive Match Plan For Employees Of Small Employers - SIMPLE'

A retirement plan that may be established by employers, including self-employed individuals. The employer is allowed a tax deduction for contributions made to the SIMPLE. The employer makes either matching or non-elective contributions to each eligible employee's SIMPLE IRA and employees may make salary deferral contributions.

INVESTOPEDIA EXPLAINS 'Savings Incentive Match Plan For Employees Of Small Employers - SIMPLE'

The employer has two alternatives when it comes to making contributions. The first is to match the amounts that each employee makes toward his or her own elective-deferral contribution up to 3% of the employee's annual compensation. The second alternative is for the employer to make a flat 2% nonelective contribution to all qualified employees, regardless of whether the employee makes any contributions.

Contributions to SIMPLE IRAs are immediately 100% vested, and the IRA owner directs the investments.

To learn more about the rules governing retirement plans, check out Can I contribute to my Roth IRA while participating in my employer-sponsored retirement plan?

RELATED TERMS
  1. Employee Savings Plan

    A pooled investment account provided by an employer that allows ...
  2. Individual Retirement Account - ...

    An investing tool used by individuals to earn and earmark funds ...
  3. Traditional IRA

    An individual retirement account (IRA) that allows individuals ...
  4. Roth IRA

    An individual retirement plan that bears many similarities to ...
  5. Simplified Employee Pension - SEP ...

    A retirement plan that an employer or self-employed individuals ...
  6. Saver's Tax Credit

    A non-refundable tax credit available to lower income individuals ...
Related Articles
  1. When are Simple IRA contributions due?
    Retirement

    When are Simple IRA contributions due?

  2. I work for two companies. How much can ...
    Retirement

    I work for two companies. How much can ...

  3. Tax-Saving Advice For IRA Holders
    Taxes

    Tax-Saving Advice For IRA Holders

  4. Retirement Savings Plans For Kids
    Savings

    Retirement Savings Plans For Kids

Hot Definitions
  1. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  2. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  3. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  4. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  5. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  6. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
Trading Center