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How simple are Simple IRA’s?

Posted by Admin Posted on June 24 2016

Employers with 100 or fewer employees can have them (including the self-employed) if they don’t maintain another retirement plan.  It must be offered to all employees who have made $5,000 or more from the employer in any two previous years and are expected to do so again this year.


Employees can contribute up to $12,500 per year ($15,500 if 50 or older).  The employer match can be up to 3% of wages or the employer can contribute 2% of wages for all eligible employees (including nonparticipants). 


There are penalties of 10% (25% within first two years of participation) if funds are withdrawn early.  No loans from the funds are permitted.


There are certainly complexities to the Simple IRA, but it can definitely be termed as simple when compared to the other retirement plan options.  They require no annual 5500 report to the U.S. Department of Labor.  They can be one of the lowest cost retirement plans for an employer.