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. Halloween Strategy

    An investment technique in which an investor sells stocks before May 1 and refrains from reinvesting in the stock market ...
  2. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  3. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  4. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  5. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  6. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
Trading Center