As an employer, you can offer a salary deferral plan for your employees easily and affordably.
A SIMPLE IRA allows you to offer a salary deferral plan minus the cost or administrative responsibilities associated with traditional 401(k) plans.
Eligibility to Contribute
- As an employer you can contribute for yourself and your employees at any age.
- Works well for companies with 100 or fewer employees and desire for a simple low cost retirement plan.
Maximum Annual Contribution
- Employer (required): Either dollar-for-dollar matching up to 3% of compensation, or 2% of compensation to all eligible employees
- Employee: Up to 100% of compensation or $12,500 for 2015 (for those age 50 and over the limits increase to $15,500 for 2015)
- Employers can deduct contributions from federal taxable income.
- Employee can make pre-tax contributions.
Taxation of Earnings and Withdrawals
Tax-deductible contributions and earnings are taxed as ordinary income when withdrawn.
Types of Investments
Stocks, bonds, mutual funds and Advisory Products available through a Wells Fargo Advisors brokerage account.
25% IRS early withdrawal penalty if withdrawn during the first two years after the SIMPLE IRA is opened. After that, 10% early withdrawal applies before age 59½ unless exception applies.
- Medical expenses in excess of 7.5% of AGI
- Health insurance premiums if unemployed for 12 consecutive weeks
- Qualifying higher education expenses
- Qualifying first time home purchase ($10,000 lifetime limit)
- Qualified military reservist
- Substantially equal payments made over life expectancy
Must begin at age 70½.
Deadline to Set Up and Fund
- Must establish by October 1 of the first plan year.
- Salary Deferrals must be deposited within 30 days after the end of the month in which the amount would otherwise have been payable to the employees in cash.
- Employer contribution may be made through the business’ tax filing due date plus extensions.
Commissions and Fees
Vary by account and investment option
Call us at 1-877-493-4727