SIMPLE IRA

• Plan description
• Key features
• Who can establish
• Annual contributions
• Annual fees

Plan description

SIMPLE stands for Savings Incentive Match Plan for Employees. It's a payroll deduction plan that permits an employee to make pretax salary deferral contributions in addition to the employer's contribution.

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Key features

• Inexpensive 401(k)-type plan for the small business owner.
• No 401(k)-type discrimination testing.
• Deductible employer contributions are made directly to employees' IRAs.
• Employer has the flexibility to choose between two contribution options.
• Employer contributions are mandatory.
• All contributions must be 100% immediately vested.

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Who can establish

Self-employed persons, partnerships, S-corporations¹, C-corporations¹, nonprofit, tax-exempt and governmental entities with 100 or fewer employees. Generally, the employer may not maintain another plan.

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Annual contributions

Please see Retirement Plan Limits for the current compensation and contribution limits for this plan.

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Annual fees

$10 per account² includes 1099-R and 5498. Paid by the employee.

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¹S-corporations and C-corporations are two different types of legal structures, each of which is subject to different tax rules.

²$10 per account is drafted automatically unless otherwise instructed.

This information does not constitute tax advice. Please consult your tax advisor about your particular situation.