A Saving Incentive Match Plan for Employees of Small Employers (SIMPLE IRA) is an employer-sponsored retirement plan. To be eligible to have a SIMPLE, you must employ 100 or fewer employees and you, the employer, cannot currently maintain another qualified plan.
A sole proprietor may establish a SIMPLE provided he meets certain requirements. This product allows an employee/participant to contribute funds from his or her own payroll and the employer can match the contribution up to a certain percentage of the employee's compensation.
Limits exist as to how much the employer may contribute (i.e. electively defer) and there are limits as to the matching contribution the employer must make.
An employee may elect to defer an amount not to exceed the amount set forth in the following chart:
Younger than age 50
Age 50 or older
*Annual cost-of-living adjustments (COLA) determines the deferral limit.
An employee is not eligible to defer more than this chart indicates or more than his or her compensation.
Contributions to a SIMPLE are excludable from the gross income of the employee.
The employer will be able to deduct both its elective deferral contributions and its matching contributions.
For more details, speak to one of our IRA Specialists.