SIMPLE IRA

SIMPLE IRA  –  Savings Incentive Match PLan for Employees.

SIMPLE IRA plans are most commonly used in start up companies with less than 100 employees. There is no fee to open the accounts and there are no administrative fees. The plan is setup by opening a SIMPLE IRA for each participant at any brokerage firm such as TD Ameritrade.

The employer is required to make a contribution as a matching contribution of up to 3% of employee compensation or a 2% nonelective contribution for each eligible employee.

Under the “nonelective” contribution formula, even if an eligible employee doesn’t contribute to his or her SIMPLE IRA, that employee must still receive an employer contribution to his or her SIMPLE IRA equal to 2% of his or her compensation.  The employee is always 100% vested in their SIMPLE IRA.

The maximum amount that an employee can put into a SIMPLE IRA is $11,500. Employees over the age of 50 can contribute an additional $2,500 per year under a catch up provision.

In order to participate in a SIMPLE plan an employee including a self employed individual who received earned income must have earned at least $5,000 in compensation during any two years before the current calendar year and is expect to receive at least $5,000 during the current calendar year.

It is great that you are choosing a retirement plan but remember that you should choose your investment options just as wisely. Pay close attention to price vs. performance. For every percent that you spend in fees, that is less money available to you and your employees at retirement.

Visit the IRS website for more information or call us at 678.521.0680 ext1.

Recent Tweets

wwm twitter

I posted a new photo to Facebook http://t.co/EGbcYmEqYf
- Monday Oct 20 - 11:00pm

wwm twitter

Corporate earnings remain strong. This is good for buy and hold investors.
- Wednesday Oct 15 - 10:06pm

Newsletter

Sign up for Wiser's E Newsletter

From Our Blog

What Happens When You Inherit an IRA

What happens to a Traditional IRA when the owner has passed and a non-spouse is inheriting? A non-sp...

Dream Planning

In working with financial planning clients, one of the questions we ask is “What are your dreams d...

Pay Yourself First

A recent survey by the American Savings Education Council indicated that Americans of all wage level...

Your Advisors Interest May Not Align With Yours

When individuals are choosing an investment advisor, it can be a very confusing process. After all, ...

5 Ways Your Brain Can Sabotage Your Investing

The stock market is a great brawl in which minds with opposing views battle over whether prices will...