SIMPLE IRA

SIMPLE IRA

For Employers

A SIMPLE IRA : can be established by company that:

Has no more than 100 employee who earned at least $5000 in compensation from the company during the prior calendar year

Maintains no other qualified plans

Want retirement vehicle allowing employee contributions

SIMPLE IRA specific

No set-up cost

No IRS approval or annual From 5550 reporting required ( certain disclosure and notification must be provides to employees annually and to e employees)

No minimum number of participants required

Plan may be terminated at the end of at any calendar year without cost

Eligible employees may but are not required to contribute a portion or their compensation, up to the annual maximum deferral amount(with additional Catch up contribution if eligible)

Required employer contribution

Company must select from one of the the following options:

Matching contribution : 100% of salary deferral up to 3% of an employee's compensation (may be reduced to no less than 1% in two out of five years)​

Non-elective contribution:2% of each eligible employee's compensation(subject to IRS limit) regardless of weather they are deferring salary​​

Any contributions mad eon behalf of plan participants are generally tax deductible by the employer​​

Employee Eligibility Requirements

Employees are eligible to participate if they:

Are expected to earn at least $5,000 in the current calendar year

Earned at least $5,000 in any two years preceding the current year (whether or not consecutive)

Employer can reduce or eliminate earnings requirements for prior years and/or the current year

Maximum Deferrals

Year

Amount

2021

$13,500

2022

$14000

Catch-Up Contributions (participants age 50 and older)

Year

Amount

2021

$3000

2022

$3000

1.    Your employer who set up the SIMPLE IRA is required by law to match your contributions up to 3% of compensation (if the employer does not make non-elective contributions) and their contributions belong to you immediately. You can take them with you should you leave your employer. Catch-Up Contributions (participants age 50 and older)

2.    Age 701/2 if the participant reached 701/2 before January 1, 2020.

3.    Maximum deferral amounts are subject to change by the IRS annually, based on inflation.

As a small business owner with up to 100 employees, you can open a Schwab SIMPLE IRA as a low-cost, easy way to contribute to your own retirement and lower your taxes, as well as provide your employees with a tax-advantaged, company-sponsored retirement plan.

Benefits

Easy setup and management-Unlike other small business retirement plans, a SIMPLE IRA doesn't require any IRS filing or compliance testing.

Great value-Keep your costs low and maximize your investment returns with no account opening or maintenance fees (other account fees, fund expenses, and brokerage commissions may apply) and a wide choice of no-load, no-transaction-fee mutual funds.

High contribution limits-Benefit from high salary deferrals into your account as well as contributions from your business.

Employee retention-Attract and retain valuable employees with a retirement plan that both you and your employees contribute to..

Tax advantages-As an employer, you can generally deduct any contributions you make on behalf of your plan participants from your business expenses. And any earnings in your own participant account are tax-deferred until withdrawal. You can also receive a tax credit for establishing a new SIMPLE IRA.

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