Savings Incentive Match Plan For Employees Of Small Employers - SIMPLE


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.

BREAKING DOWN '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?

  1. Employee Savings Plan

    A pooled investment account provided by an employer that allows ...
  2. Simplified Employee Pension - SEP ...

    A retirement plan that an employer or self-employed individuals ...
  3. Roth IRA

    An individual retirement plan that bears many similarities to ...
  4. Individual Retirement Account - ...

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

    An individual retirement account (IRA) that allows individuals ...
  6. Saver's Tax Credit

    A non-refundable tax credit available to lower income individuals ...
Related Articles
  1. Taxes

    Tax-Saving Advice For IRA Holders

    Be informed about benefits and deductions that may apply to you and avoid costly mistakes on your return.
  2. Savings

    Retirement Savings Plans For Kids

    It's never too early to save for the future - learn how your children can get started.
  3. Retirement

    SIMPLE IRA Vs SIMPLE 401(k) Plans

    See the differences that may cause an employer to choose one plan over the other.
  4. Retirement

    Introduction To SIMPLE 401(k) Plans

    Learn about the features and benefits of the plan that is a cross between a SIMPLE IRA and a traditional 401(k) plan.
  5. Entrepreneurship

    Plans The Small-Business Owner Can Establish

    Don't hesitate to adopt a smart plan for you and your employees.
  6. Entrepreneurship

    401(k) Plans For The Small Business Owner

    If you own a business, this may be the plan for you! Find out about its benefits and eligibility requirements.
  7. Retirement

    This comprehensive guide goes through what a SIMPLE IRA is, how to set one up, contribute to it and withdraw from it.
  8. Budgeting

    Key Questions to Ask Before Moving in Together

    Moving in together is a big step. Here are some key financial questions to ask your partner before you make the move.
  9. Professionals

    4 Ways Companies Can Relieve Workplace Stress

    Workplace stress can cost companies tons of money in lost productivity and absenteeism. Some of that is out of their control, but often they are the cause.
  10. Savings

    Passing Down Values and Money to the Next Generation

    Amassing wealth to pass down to your kids is great unless your values don't come with it. A priceless gift is teaching them to be financially responsible.
  1. Is my IRA protected in a bankruptcy?

    All types of individual retirement accounts, or IRAs, recognized under the federal tax code enjoy substantial protection ... Read Full Answer >>
  2. When are Simple IRA contributions due?

    According to the IRS, contributions to SIMPLE IRA plans that are taken from an employee's pay check as a salary reduction ... Read Full Answer >>
  3. I work for two companies. How much can I contribute to each company's SIMPLE IRA?

    It depends. If you work for two companies that are unrelated and unaffiliated, you can make salary deferral contributions ... Read Full Answer >>
  4. My company has three partners but plans to hire more this year. Would we be better ...

    It depends. The SBO-401(k) plan is suitable if the plan covers only the business owners - in this case, the partners in the ... Read Full Answer >>
  5. What are some commonly missed deductions for business owners?

    If you own a business, you are eligible to deduct certain business-related expenses. These include deductions for the following: Home ... Read Full Answer >>
  6. How can I determine if a longevity annuity is right for me?

    A longevity annuity may be right for an individual if, based on his current health and a family history of longevity, he ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Zero-Sum Game

    A situation in which one person’s gain is equivalent to another’s loss, so that the net change in wealth or benefit is zero. ...
  2. Capitalization Rate

    The rate of return on a real estate investment property based on the income that the property is expected to generate.
  3. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
  4. Revenue

    The amount of money that a company actually receives during a specific period, including discounts and deductions for returned ...
  5. Normal Profit

    An economic condition occurring when the difference between a firm’s total revenue and total cost is equal to zero.
  6. Operating Cost

    Expenses associated with the maintenance and administration of a business on a day-to-day basis.
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!