Can any employer establish a SIMPLE IRA plan?
SIMPLE IRA plans may be established only by employers that had no more than 100 employees who earned $5,000 or more in compensation during the preceding calendar year (the “100-employee limitation”). For purposes of the 100-employee limitation, all employees employed at any time during the calendar year are taken into account, regardless of whether they are eligible to participate in the SIMPLE IRA plan. Thus, employees who are excludable under the rules of Internal Revenue Code section 410(b)(3) or who have not met the plan’s minimum eligibility requirements must be taken into account. Employees also include self-employed individuals described in section 401(c)(1) who received earned income from the employer during the year.
