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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.


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.


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%.

References in periodicals archive ?
In 2005 he decided to start his own consultancy and in 2007 he joined Simpler Consulting where he met Chris Cooper, a kindred spirit, and together they created Simpler Design System.
The Simpler Group was founded on the belief that small and medium-sized businesses deserve Web services and online marketing as unique as their products and suitable to their specific markets.
Chin also argued that while making a simpler system for everyone would be an arduous task, it may be easier to simplify the process for some, but not others.
A simpler system will also be easier for the Internal Revenue Service to enforce.
Figuring out what the box jellyfish's 16 simpler eyes do will take some more work, Nilsson says.
By making the backup and recovery process faster, simpler, verifiable and more cost effective, sophisticated storage systems extend the benefits of backup software and vastly improve the data protection infrastructure.
In 1992, The Jensen Group began an ongoing research project, "The Search for a Simpler Way.
In addition to a more user-friendly format that makes it simpler and easier to navigate, a new feature of the site allows INDA members to automatically post their press releases on the site.
I write these words at the beginning of another academic year, and I am reminded of different times in my life and in society, when life was simpler, family resources quite limited, and the beginning of the "academic year" in first or second grade was marked by the newness and freshness--and affordableness--of pencils and Crayolas.
This project constitutes a strong endorsement of Auspex's vision of creating a simpler and cost-effective network storage system by converging NAS and SAN technology.