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Requirement
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SIMPLE IRA
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SIMPLE 401(k) PLAN
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Eligible employers
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100-employee rule (Section V,
Part A)
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Same
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Document
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Form 5305-SIMPLE or Form
5304-SIMPLE, prototype or individually-drafted (Section V, Part C)
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Qualified plan document, Model
amendment provided in Rev. Proc. 97-9
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Eligible employees
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$5,000 of compensation in 2 prior
years, and expected to receive $5,000 in current year (Section V,
Part D)
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Qualified plan rules apply (e.g.,
1 year/age 21) (Section VI, Part B)
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Exclusive plan
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Yes (Section V, Part B)
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Same
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Related employer rules
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Apply
|
Same
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Coverage testing
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Not applicable
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Applies (Section VI, Part B)
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Elective contributions
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Limited to $6,000 per calendar
year; 60-day election period prior to beginning of year (but
additional election periods permitted) (Section V, Part G)
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Same
|
|
Matching contribution
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Capped at 3% of compensation (may
be reduced down to 1% cap in 2 of 5 years) (Section V, Part G)
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Capped at 3% (no reduction on cap allowed) (Section VI)
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Nonelective contributions
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2% of compensation (Section V,
Part G)
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Same
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Nondiscrimination tests
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Not applicable (Section V, Part
H)
|
Same
|
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Vesting
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All contributions 100% vested
(Section V, Part G)
|
Same
|
|
Top heavy rules
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Not applicable (Section V, Part
H)
|
Same
|
|
Section 415 limits
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Not applicable (Section V, Part
F)
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Applicable (Section VI, Part B)
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Compensation dollar limit
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Only applies to nonelective
contributions (Section V, Part G)
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Applies to matching and
nonelective contributions (Section VI, Part B)
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|
Section 402(g) limit
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Applies (Section V, Part G)
|
Same
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Employer deduction
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No 15% deduction limit (Section
V, Part G)
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Same (Section VI, Part B)
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Form 5500 filing
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No (Section V, Part H)
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Yes (Section VI, Part B)
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|
Trust accounting
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Not applicable (Section V, Part
H)
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Required (Section VI, Part B)
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Transmittal of elective
contributions
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Earlier of: 1) 30 days after
close of month. or 2) earliest date employer able to segregate
from its assets (Section V, Part F)
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Earlier of: 1) 15th business day
of the following month, or 2) earliest date able to segregate
|
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Fiduciary responsibility
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Limited, expires after no more
than 1 year (Section V, Part F)
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Normal ERISA rules apply
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Withdrawals
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Permitted anytime; 25% tax
penalty applies if employee is under age 59-1/2 and withdrawal is
in first 2 years (Section V, Part I)
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Terms of plan control; selection
401(k) restrictions apply (Section VI, Part D); no 25% penalty
|
|
Minimum distributions
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Must start by April 1 of year
following calendar year in which age 70-1/2 attained (Section VI,
Part B)
|
Must start by April 1 of year
following later of: 1) calendar year age 70-1/2, or 2) calendar
year retires, if employee is not 5% owner (Section VI, Part B).
For a 5% owner, the rule is the same as for SIMPLE-IRAs
|
|
Rollovers
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Only into another SIMPLE-IRA or
other IRA (Section V, Part I)
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Into qualified plan or IRA (other
than SIMPLE-IRA) (Section VI, Part B)
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Joint and survivor rules
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Not applicable
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Required unless exemption
requirements under IRC §401(a)(11) are satisfied (Section VI,
Part B)
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Plan year
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Must be calendar year (Section V,
Part C)
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Same
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Participant loans
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Not permitted
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Permitted
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