SIMPLE IRA
What is a SIMPLE IRA?
SIMPLE IRAs give small employers an easier way of offering their employees a valuable benefit. The SIMPLE is a retirement plan funded by employee pre-tax salary deferrals and required employer contributions.
What is the benefit to an employee?
A SIMPLE IRA provides employees with the benefits of a salary deferral program combined with the investment flexibility of a self-directed IRA. There are no top-heavy rules or discrimination tests required. Employees can reduce their current taxable earnings, while saving for retirement.
Who may open a SIMPLE IRA?
This plan was designed for Sole Proprietors, Partnerships, and Corporations with 100 or fewer eligible employees. Employees may defer part of their annual compensation to the plan, and employers are required to make a contribution in one of two ways:
- 2% of compensation to all eligible employees, or
- 100% match on employee deferrals up to 3 percent of compensation (with some flexibility)
For more information about SIMPLE IRAs and other retirement plans, contact us.
