Plan description

SIMPLE stands for Savings Incentive Match Plan for Employees. It's a payroll deduction plan that permits an employee to make pretax salary deferral contributions in addition to the employer's contribution.

Key features

• Inexpensive 401(k)-type plan for the small business owner.
• No 401(k)-type discrimination testing.
• Deductible employer contributions are made directly to employees' IRAs.
• Employer has the flexibility to choose between two contribution options.
• Employer contributions are mandatory.
• All contributions must be 100% immediately vested.

Who can establish

Self-employed persons, partnerships, S-corporations¹, C-corporations¹, nonprofit, tax-exempt and governmental entities with 100 or fewer employees. Generally, the employer may not maintain another plan.

Annual contributions

Please see Retirement Plan Limits for the current compensation and contribution limits for this plan.

Annual fees

$10 per account ² includes 1099-R and 5498. Paid by the employee.

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¹ S-corporations and C-corporations are two different types of legal structures, each of which is subject to different tax rules.

² $10 per account is drafted automatically unless otherwise instructed.

This information does not constitute tax advice. Please consult your tax advisor about your particular situation.