- Available for small businesses - generally with 100 or fewer employees who earned at least $5,000 in compensation during the preceding year
- Employer cannot maintain any other retirement plan
- Withdrawals before age 59½ subject to penalty
Benefits for employer
- Gain your employees trust and respect
- Generally more cost-efficient and less complex than tax-qualified plans
- Not subject to special 401(k) nondiscrimination test or top-heavy rules
- Less restrictive than individual IRAs
- Employees make contributions to which you match*
- Establish a SIMPLE plan as an IRA for each employee or as part of a 401(k) plan
Benefits for employees
- Fully vested, tax-deferred retirement
- Available for self-employed individuals and company employees
- Employees 50+ may make "catch-up" contributions
- Employer makes matching contributions
- Employer contributions are not includable in employee incomes for income-tax purposes
- Tax-free until time of withdrawal
- For 2020, employee contributions from their salary to a SIMPLE IRA cannot exceed $13,000.
Build a financial cushion and
earn competitive interest.
*The IRS states that the employer is generally required to match each employee's salary reduction contributions on a dollar-for-dollar basis up to 3% of the employee's compensation. Instead of matching contributions, an employer can choose to make nonelective contributions of 2% of each eligible employee's compensation.