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| Savings Incentive Match Plan for Employees (SIMPLE) IRA |
The Savings Incentive Match Plan for Employees (SIMPLE) IRA is a tax-qualified retirement plan for businesses (C Corps, S Corps, Partnerships, and Sole Proprietorships) with fewer than 100 employees. It enables eligible firms to offer 401k-type benefits without complicated rules or high administrative expenses. It enables eligible employees to make tax-deductible contributions beyond what a traditional IRA allows.
For businesses, SIMPLE means:
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| Required employer contributions can be made on either a 3 percent “elective” basis or a 2 percent “non-elective” basis.
Under the elective method, the employer is required to contribute only if an employee “elects” to contribute. Under the non-elective method, the employer contributes a flat percentage of compensation (2 percent minimum) for everyone regardless of any personal participation. SIMPLE contribution limits for individuals are listed below. One hundred percent of earned income can be contributed. All contributions must be made through salary withholding.
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