SIMPLE IRAs: Conclusion
AAA
  1. SIMPLE IRAs: Introduction
  2. SIMPLE IRAs: Eligibility Requirements
  3. SIMPLE IRAs: Contributions
  4. SIMPLE IRAs: Distributions
  5. SIMPLE IRAs: Conclusion

SIMPLE IRAs: Conclusion

By Denise Appleby

A Savings incentive match plan for employees (SIMPLE) is an IRA-based employer plan under which eligible employees are allowed to make contributions to their SIMPLE IRAs, and employers are required to make either matching or nonelective contributions.

Let's recap:

  • SIMPLEs can be established by business owners who had 100 or fewer employees who earned at least $5,000 during the preceding year.
  • Unlike qualified plans, a SIMPLE IRA plan is easy to administer. The start-up and maintenance costs for SIMPLE IRAs are very low compared to qualified plans.
  • Any employer - which includes sole proprietorships, partnerships, corporations and non-profit organizations - may establish a SIMPLE IRA Plan, as long as the employer meets the eligibility requirements.
  • Contributions to SIMPLE IRAs are immediately 100% vested, and the SIMPLE IRA owner (employee) directs the investments.
  • An employer is required to make either dollar-for-dollar matching contributions (not to exceed 3% of the employee's compensation), or 2% nonelective contribution to all eligible employees regardless of whether they make deferral contributions.
  • The tax and penalty treatment applicable to distributions from a SIMPLE IRA is determined by the SIMPLE IRA owner's age at the time of distribution.

  1. SIMPLE IRAs: Introduction
  2. SIMPLE IRAs: Eligibility Requirements
  3. SIMPLE IRAs: Contributions
  4. SIMPLE IRAs: Distributions
  5. SIMPLE IRAs: Conclusion
RELATED TERMS
  1. Elder Care

    Elder care, sometimes called elderly care, refers to services ...
  2. Gold IRA

    Definition of Gold IRA
  3. Eligible Transfer

    An IRS-allowed movement of assets into or out of an individual ...
  4. Leveraged Benefits

    The use – by a business owner or professional practitioner – ...
  5. Peri-Retirement

    A term for the period of time leading up to actual retirement. ...
  6. MyRA

    A new tax-advantaged retirement account that President Barack ...
  1. Are part-time employees eligible for fringe benefits?

    Learn how offering fringe benefits allows employers to entice new talent to join their teams, although part-time workers ...
  2. Who is exempt from paying Social Security taxes?

    Learn about the groups of people who qualify for exemption from Social Security taxes, and explore the process of applying ...
  3. How can I avoid paying taxes on my Social Security income?

    Learn how to calculate the percentage of Social Security income benefits that may be taxable, and discover strategies to ...
  4. What is the difference between a fixed and variable annuity?

    Understand the difference between fixed, variable and indexed annuities, and read a brief summary of their respective risks ...

You May Also Like

Related Tutorials
  1. Retirement

    Consolidating Your Retirement Money

  2. Retirement

    Analyzing The Best Retirement Plans And Investment Options

  3. Budgeting

    The Complete Guide To Retirement Planning For 40-Somethings

  4. Retirement

    The Complete Guide To Retirement Planning For 50-Somethings

  5. Taxes

    The Complete Guide To Retirement Planning For 30-Somethings

Trading Center