SIMPLE-IRA

Type of Business

¨  Employees help fund retirement savings

¨  Employer willing to make contributions

¨  Employer avoids costly administration

Features and Advantages

¨  Employees make pre-tax salary deferrals

¨  Employee has full control

¨  Employer must make a matching or non-elective contribution

¨  No plan administration required

Administration

No testing or reporting

Establishment

Prior to October 1 for current-year contributions

Eligibility

All employees who have earned $5,000 in compensation in any two preceding years

Vesting

100% Immediate

Annual Compensation Limit

¨        $200,000 for non-elective contribution

¨        None for salary deferral or matching contribution

Maximum Employee Contributions

Defer up to $7,000

Maximum Employer Contributions

¨     3% match capped at $7,000, OR

¨     2% non-elective contribution to all eligible employees capped at $3,400

Mandatory Minimum Distributions

¨     Begin by age 70 ½

¨     Taxed as ordinary income

Distributions Before Age 59 1/2

25% penalty if account has been open less than two years, 10% penalty thereafter

Distributions After Age 59 1/2

¨     Taxed as ordinary income for accounts that have been open at least two years

¨      Employee can still be employed at time of withdrawal

Loans

Not permitted