What is a Savings Incentive Match Plan for Employees (SIMPLE) IRA?
• This is an employer-run savings plan in the form of an IRA, featuring employee tax-deferred contributions and matching contributions by the employer. Employers with 100 eligible employees or fewer and who do not maintain another retirement plan are eligible to establish a SIMPLE IRA. For more information on employee eligibility, reference IRS Publication 590 or IRS Publication 560. • The employer makes all contributions and is limited to $8,000 ($7,000 in tax-year 2002) in employee-elected deferrals, and $8,000 ($7,000 in tax-year 2002) in employer-matching contributions per year. Under EGTRRA, the following elective deferrals increases go into effect: 2002 $7000; 2003 $8,000; 2004 $9,000; 2005 and beyond $10,000, plus potential COLA increases in $500 increments beginning in 2006. • The employer has the option of either matching the employee’s deferrals (up to 3% of the gross salary) or making non-elective contributions (2% or less) to ALL eligible employees regardless of the employe
Related Questions
- Are Savings Incentive Match Plan for Employees (SIMPLE) IRA plan participants allowed to contribute to a Traditional or Roth IRA?
- Whats the deadline for establishing and funding a Savings Incentive Match Plan for Employees (SIMPLE) IRA?
- How much must an employer contribute to the Savings Incentive Match Plan for Employees (SIMPLE) IRA?
