Savings Incentive Match Plan for Employees (SIMPLE) IRA
The Savings Incentive Match Plan for Employees (SIMPLE) IRA is a tax-qualified retirement
plan for businesses (C Corps, S Corps, Partnerships and Sole Proprietorships)
with fewer than 100 employees. It enables eligible firms to offer 401k-type benefits
without complicated rules or high administrative expenses. It enables eligible employees
to make tax-deductible contributions beyond what a traditional IRA allows.*
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For businesses, SIMPLE means:
- No top-heavy rules.
- No Form 5500 filings each year.
- Fully deductible contributions (subject to certain limits).
For individuals, SIMPLE means:
- Contribution limits far above what a Traditional IRA allows.
- Complete investment control.
- Some level of employer contributions.
- Full and immediate vesting of employer contributions.
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Required employer contributions can be made on either a 3 percent “elective”
basis or a 2 percent “non-elective” basis.
Under the elective method, the employer is required to contribute only if an employee
“elects” to contribute. Under the non-elective method, the employer
contributes a flat percentage of compensation (2 percent minimum) for everyone regardless
of any personal participation.
SIMPLE contribution limits for individuals are listed below. One hundred percent
of earned income can be contributed. All contributions must be made through salary
withholding.
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Year |
Under Age 50 |
Over Age 50 - Catch-up Contribution |
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2010
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$11,500
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$2,500
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2011
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Indexed
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Indexed
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For more details, please contact us so we can explain
all the workings of the SIMPLE IRA.
*Erie Family Life products are not available in New York.
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