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?

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  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. 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 >>
  5. 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 >>
  6. When can catch-up contributions start?

    Most qualified retirement plans such as 401(k), 403(b) and SIMPLE 401(k) plans, as well as individual retirement accounts ... Read Full Answer >>

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