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Savings Incentive Match Plan for Employees of Small Employers

An IRA or 401(k) plan for employees of small businesses, usually with fewer than 100 employees. The employee may make tax deductible contributions, and the employer may contribute in one of two ways. The employer may either match employee contributions up to 3% of the employee's annual salary, or provide a contribution of 2% of the salary regardless of how much the employee contributes. The employee controls the investment of the contributions.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


A savings incentive match plan for employees that is similar to but more flexible than an IRA for businesses with 100 or fewer employees. Employees enter into a qualified salary reduction agreement to contribute a percentage of their annual compensation to a tax-deferred retirement account.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.


A SIMPLE, also known as a SIMPLE IRA, is short for Savings Incentive Match Plans for Employees, an employer sponsored retirement savings plan that may be offered by companies with fewer than 100 employees.

Employers must contribute to eligible employees' accounts each year in one of two ways. They can make a contribution equal to 2% of salary for every employee, or match dollar-for-dollar each employee's contribution to the plan, up to 3% of that employee's annual salary.

A SIMPLE may be set up by establishing an IRA in each employee's name or as a 401(k). Congress sets an annual dollar limit on the tax-deferred amount an employee may contribute, based on the type of SIMPLE it is. Contribution ceilings for SIMPLE-IRAs are lower than for other employer sponsored plans.

You may withdraw assets from a SIMPLE without penalty if you are 59 1/2 or older and retired. And you must begin taking minimum required distributions by April 1 of the year following the year you turn 70 1/2 unless you're still working. Taxes are due on distributions at your regular tax rate.

You may roll your assets over into another employer plan or an IRA if you leave your job for any reason or retire.

Two key differences between SIMPLEs and other employer plans are that your account must be open at least two years before you can withdraw or move the money, and the federal tax penalty for early withdrawal is 25% of the amount you take, rather than 10%.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
Enos seems at first to have pushed Honey too far toward borderline simple-mindedness. But as she hits the brandy bottle with increasing abandon, the actress finds the tenderly exposed heart of unsavvy Honey, making the emotional devastation wreaked by George on the young couple even more harrowing.
Simple-mindedness goes under the heading of upbeatness, and "We are justified in being upbeat because we know that we are in the right, and that the right will eventually prevail." These intellectual shortcuts and complacencies would embarrass the writers invoked in the reading list that makes up D'Souza's last chapter.
But with Ronald Reagan a terrible simple-mindedness took hold on the right: Government, except the defense establishment, was bad, period.
What they can't quite grip, and this is where feminist "wave theory" reveals its simple-mindedness, is that I am their cultural contemporary.
They include cigarette-puffing, macho Sister Rufina (Elena Irureta), who has always wanted to be a priest; Sister Asun (Loli Astoreka), who first believes she is pregnant and then believes she has had the baby; Sister Remedios (Aitzpea Goenaga), who chats merrily away to a statue of Jesus as though he were alive, and Rosarito (Ane Gabarain, giving the strongest comic pert), whose innocence verges on simple-mindedness.
Emmett Tyrrell, the conservative editor of the American Spectator (of all people), rejected such simple-mindedness among his fellow Reaganites and ordered a round of applause for those who had fought the cold war over the long run-specifically beginning with Truman, Acheson, Marshall and Kennan, and continuing through the parade of Presidents in late-twentieth-century America.
But Freedomland, even more than the much-praised Clockers, redeems the thrilling promise that imagination offers to a society too often distorted by Tabloid Culture's blithe simple-mindedness.