Savings Incentive Match Plan for Employees (SIMPLE) IRA

A Savings Incentive Match Plan for Employees, commonly referred to as a SIMPLE IRA, is a type of employer-sponsored retirement savings plan that allows employers and their employees to increase the amount they can save for retirement. The SIMPLE IRA is an alternative option for self-employed individuals or small business owners who have 100 employees or fewer.

The rules governing a SIMPLE IRA plan are not as complicated as a 401(k) plan. Contributions made to the plan have the potential to provide the employer with a tax-deduction equivalent to the amount of the contribution made into the account each year. This potential tax benefit is subject to government guidelines. Earnings within the account are tax-deferred until withdrawn, just like a 401(k) plan.

This means that the investment income in these accounts grows without having to be included in the account owner’s annual taxable income. Only when the funds are withdrawn from the account as a distribution will taxes potentially apply.

Key Features

• Tax-deferred growth
  Funds are tax-deferred while in the account, which means that you do not have to pay taxes until the funds or assets are withdrawn from the account.

• Tax deductions
  Contributions to a SIMPLE IRA may be tax deductible by a business, provided the employer meets certain requirements.

• Employee retention
  This plan may encourage employee retention by providing them with an additional benefit to assist them in saving more for retirement.

• 100% vested
  Contributions made to a SIMPLE IRA are always 100% vested.

NOTE: Please visit www.irs.gov for complete rules and regulations concerning SIMPLE plans. Certain restrictions apply regarding prohibited transactions.

Frequently Asked Questions

about SIMPLE IRAs