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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 ?
Il a, en outre, appele le ministre delegue charge de la Fonction publique a definir sans delais un calendrier pour simplifier les procedures en coordination avec la CGEM, et en harmonie avec le programme annuel de la Commission nationale chargee du climat des affaires, en commencant par les procedures dont la simplification ne requiert pas une revision de textes juridiques.
Proposed simplifications include a shortening of the qualification process, reducing the number of fuels covered by CRC from 29 to four and reducing the amount of reporting required by businesses.
We have been calling for greater simplification and transparency in the UK tax system for many years and we are delighted the Treasury has recognised the need to streamline the system though the establishment of the Office of Tax Simplification and we hope this commitment continues.
While the National League of Cities supports simplification of the sales and use tax system, local governments have serious concerns with the provision in the bill mandating state administration and collection of local telecommunication taxes and fees.
This appears to be as a direct result of simplification, which has made it possible to pay more into your pension.
In the year since the SSUTA became effective, work has continued on a number of outstanding issues that have plagued the simplification process from its infancy.
How would adverse effects of simplification on program costs, redistribution of benefits, program integrity, and delivery of federal, state, and institutional financial aid be assessed?
Simplification takes the organization back to functional specialization, wherein individual staff members worked on very specific, and very limited, subsets of tasks.
Simplification is a strategy employed by language learners due to an impoverished interlanguage.
The report, submitted to Congress annually by the National Committee on Vital Health and Statistics, indicates that "significant progress occurred on several HIPAA Administrative Simplification standards during the past year," but it concludes that the full economic benefits of the Administrative Simplification provisions will only be realized when all the standards are enacted.
FASAC members had a multitude of suggestions for the board on how to address simplification, including field-testing proposed standards more aggressively, giving additional weight to cost-benefit considerations and using more examples to illustrate concepts.
These are concerns that can, and must, be ironed out - because worthwhile though tax simplification is, if it puts an undue burden on certain regions of the country or on the middle class, it's a nonstarter.