SIMPLE is an acronym for
savings incentive match plan for employees.
* A QCD is generally a nontaxable distribution made directly by the trustee of an IRA (other than a simplified employee pension [SEP] plan or
savings incentive match plan for employees [SIMPLE] IRA) to an eligible charity.
While it is true that Simplified Employee Pension (SEP) plans and
Savings Incentive Match Plan for Employees (SIMPLE) have a low cost due to assets held direct to fund or managed by an investment adviser, each of these plans comes with a lack of flexibility, no loan capabilities or the ability to save to a Roth tax-free.
To implement this plan the employer can use Form 5304-SIMPLE,
Savings Incentive Match Plan for Employees of Small Employers (SIMPLE)--Not for Use With a Designated Financial Institution, or Form 5305-SIMPLE,
Savings Incentive Match Plan for Employees of Small Employers (SIMPLE)--for Use With a Designated Financial Institution.
have teamed up to offer a SIMPLE IRA (or a
Savings Incentive Match Plan for Employees Individual Retirement Account) to employers with 100 or fewer employees.
Small employers who have concerns about the cost and complexity of administering a retirement plan may want to establish a
Savings Incentive Match Plan for Employees (SIMPLE) IRA.
Depending on its legal structure, the company could opt to fund an SEP (Simplified Employee Pension) IRA, SIMPLE (
Savings Incentive Match Plan for Employees) IRA, or Keogh Retirement account.
A
Savings Incentive Match Plan for Employees IRA is a tax-favored retirement plan that self-employed individuals set up for themselves, or that small employers set up for themselves and their employees.
* SIMPLE (
Savings Incentive Match Plan for Employees of small employers) IRA is similar to a 401(k) in that employees can contribute.
EXHIBIT A Comparison of the Simplified Employee Pension (SEP) Plan and the
Savings Incentive Match Plan for Employees (Simple) SEP Simple Design Individual IRA established for each retirement account participant (IRA) established for each participant Employer Yes-limited to 25% Yes-required matching Contributions of covered contributions; 3% employees payroll; dollar-for-dollar on contributions are employee elective not mandatory.
A SIMPLE (or
savings incentive match plan for employees) IRA, allows each employee to contribute $11,500, plus between 2% and 3% of your self-employment income.
The SIMPLE Cafeteria Plan Act of 2009 would create a Simple Cafeteria Plan for small businesses that would be modeled after the
Savings Incentive Match Plan for Employees (SIMPLE) pension plan enacted in 1996.
