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SIMPLE IRA Plan

A SIMPLE IRA plan - Savings Incentive Match Plan for Employees of Small Employers - is an IRA-based plan that allows employees to elect to defer a part of their salaries into the plan for retirement. Because this is a simplified plan, the administrative costs should be lower than for other, more complex plans. Under a SIMPLE IRA plan, employees and employers make contributions to Individual Retirement Arrangements (IRAs) set up for employees, subject to certain percentage-of-pay and dollar limits.

With a SIMPLE IRA plan, you:

Make either a contribution matching your employees’ contributions dollar-for-dollar up to 3% of pay or a 2% nonelective contribution for each eligible employee. (Under the “nonelective” contribution formula, even if an eligible employee doesn’t contribute to his or her SIMPLE IRA, that employee must still receive an employer contribution to his or her SIMPLE IRA equal to 2% of his or her salary.)
Cannot have any other retirement plan.
Need to complete just a form or two.

A SIMPLE IRA plan has a life cycle with four distinct stages. This page offers a basic understanding of the life cycle of a SIMPLE IRA plan.

See the SIMPLE IRA Plan Resource Library for forms, publications, frequently asked questions, etc.

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