(Savings Incentive Match Plan for Employees)
annual salary deferrals
(if under age 50)
annual salary deferrals
(age 50 or over)
Available for self-employed individuals and business owners with fewer than 100 employees
Setup and contribution deadline
Must be established by October 1. Contribution deadline is the employer's tax filing deadline, including extensions.
Easy setup and administration
IRS Form 5500 filing not required
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Can a business owner establish a SIMPLE IRA if currently sponsoring another retirement plan?
No. If a business owner currently maintains another employer-sponsored retirement plan, they may not establish a SIMPLE plan for the same tax year when contributions were made to that plan.
Do employer contributions have to be made to all eligible employees?
It depends. If a non-elective employer contribution option is chosen, contributions have to be made to all eligible employees whether they choose to participate in the plan or not. However, if a matching contribution option is chosen, contributions are only made to employees who are participating in the plan (i.e. making salary deferral contributions).
Can an employer or employee make contributions to a SIMPLE IRA while contributing to a Traditional IRA?
Yes. An individual may have both accounts. However, since an individual will be considered an active participant in an employer-sponsored retirement plan, some or all of the contributions to a Traditional IRA may not be deductible. Refer to the Contribution Limits and Deadlines table for more information.
What are the basic distribution rules for a SIMPLE IRA?
Generally distributions from a SIMPLE IRA are subject to the same distribution rules as a Traditional IRA. SIMPLE IRA distributions may be taken at any time and are taxable in the year distribution occurs. Withdrawals taken prior to age 59½ are subject to an additional 10% early distribution penalty. However, if a distribution from a SIMPLE IRA is taken within 2 years of first participation in the plan, the 10% early distribution penalty is increased to 25%.
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