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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 ?
Composed of primarily non-metal materials (PEEK-on-ceramic), the Simplify Disc is designed to be viewed on magnetic resonance imaging (MRI) in order to minimize post-operative patient exposure to radiation from computed tomography (CT) scans currently necessary to view metal discs.
Amy Rehkemper, CPO[R] founded Simplify Organizing, LLC[R] in 1999 to help busy families create a place for everything and simplify their lives.
A business can securely accept all major card brands, using Simplify Commerce's PCI-certified platform and a secure process to protect sensitive information for merchants and their customers.
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.
The Lilypad List is a must read for anyone on a quest to simplify and revitalize life and restore health to help not only oneself but also to make a difference in the lives of those near and far and to respect and nurture the very Earth itself.
At Mercersburg Academy, administrator Rutherford relies on a keyboard-equipped palmOne handheld to simplify her job and stay on top of large quantities of data.
The software application that enabled engineers to simplify an existing CAD file is called Flo/MCAD from Flomerics of Southborough, Mass.
While the two-voice texture does indeed simplify the music, because of the complex rhythms it is not particularly easy music to play.
Aranesp may provide both chemotherapy patients and caregivers the power to simplify anemia management," said Roger Perlmutter, Amgen's executive vice president for Research & Development.
It is designed to simplify the cutting of slices of equal thickness, needed for plastic repair of tympanic membrane defects, covering of middle ear implants, or reconstruction of the rear auditory canal wall.
Twenty-nine states including New Jersey, Oklahoma, and South Carolina have begun the Streamlined Sales Tax Project, meant to simplify sales tax issues nationwide.
Dallas-based Capital Senior Living Corporation (CSL) is taking steps to simplify its capital structure, capture 100 percent of the appreciation of its assets, continue its growth, and maximize value to shareholders through enhanced cash flow and higher net asset values.