A SIMPLE IRA gives you & your employees 401(k)-style features for less
A Savings Incentive Match Plan for Employees (SIMPLE) – is an affordable, IRA-based retirement savings program designed with some of the characteristics of a 401(k) in mind. It can be established by any employer with no more than 100 employees during the preceding calendar year.Connect with an Expert
Make saving for retirement SIMPLE
A SIMPLE IRA allows both you and your employees to save for retirement through work. A SIMPLE IRA allows you to contribute part of your pre-tax compensation to an IRA. This means the tax on the money is deferred until withdrawal.
As the employer, you are required to make either matching contributions or non-elective contributions on behalf of your employees, (non-elective means the contribution is made for each eligible employee regardless of whether the employee contributes).
Employees that received at least $5,000 in compensation during any two preceding years, regardless of whether or not those two years happened consecutively, and are expected to earn at least $5,000 during the current calendar year are allowed to participate.
Employees cannot opt-out of participation; however, they can choose not to contribute for a year. You can also exclude employees under certain circumstances.
Visit the IRA website for SIMPLE IRA Plan Participation FAQs.
How Do I Contribute as an Employer?
As an employer, you have two options for how you can contribute to your employees’ IRAs:
1. Match employee contributions dollar-for-dollar up to 3% of compensation, or
2. Make 2% nonelective contributions to all employees.
In two years of any five-year period, you may reduce the required dollar-for-dollar match to as low as 1% of participant employee compensation. There are additional instances where employer contributions may vary from the above descriptions.
How Do My Employees Contribute?
An employee may defer up to $13,000 in 2019. Employees age 50 or older can make a catch-up contribution of up to $3,000.
Employee contributions will be chosen by each employee and expressed either as a percentage of compensation for the year, or as a specific dollar amount.
Visit the IRS website for more details on Simple IRA Plan Contribution FAQs.