Savings Incentive Match Plan for Employees

In this written salary reduction arrangement, eligible employees contribute to an IRA in their name. Your employer is required to make annual contributions for each eligible participant. This type of arrangement is available to self-employed individuals or owners of companies that have 100 or fewer employees and no qualified retirement plan. Employees are eligible for a SIMPLE-IRA if they earn at least $5,000 annually. SIMPLE-IRAs may be funded by annuities.

For 2017, the maximum employee contribution limit is the lesser of 100% of compensation or $12,500. SIMPLE IRA owners age 50 or older (as of December 31 of the tax year to which the contribution relates) may be eligible to make an annual “catch-up” contribution each year of $6,000. The money contributed to a SIMPLE IRA will accumulate tax deferred until money is withdrawn. Withdrawals are subject to ordinary income tax and, if taken before age 59 ½, a 10% federal income tax penalty may apply and this penalty is increased to 25% for distributions taken within the first two years of participation in the plan.

CRN201903-208966