SIMPLE IRAs

Savings Investment Match Plan for Employees (SIMPLE IRA) are retirement programs for self employed individuals or small businesses with fewer than 100 employees. Like many other retirement plans, both employees and employers contribute to the plan and receive tax benefits. Employees can choose to participate in the plan if they have made at least $5,000 in any two previous years and expect to earn the same amount in the current year.

SIMPLE IRAs are an attractive option for many small businesses because they are very easy to set up, the costs to maintain are low and there are no IRS filing requirements. Employers are required to match up to 3% of the employee’s compensation or at least 1% for no more than two out of five years. You can also elect to make a 2% contribution to all employees, even if they do not contribute to a plan themselves.