What Are The Basics Of A Simple IRA


A Savings Incentive Match Plan for Employees (SIMPLE) is a tax-favored retirement plan that eligible small employers (including self-employed individuals) can set up for the benefit of their employees.

  • A SIMPLE IRA plan can be used as a Salary Reduction IRA.

Employees can choose to make contributions up to the allowable limit. Employers must contribute to the plan by matching the employee’s contributions dollar for dollar up to 3% of the employee’s compensation, or by just contributing 2% of compensation with no matching. All contributions are made directly to the IRA established for each employee.

  • Contributions are Tax Deferred in a SIMPLE IRA plan.

Contributions are excluded from your gross income and are not taxed until they are withdrawn.

  • You can Self Direct a SIMPLE IRA plan.

Use your Self-Directed SIMPLE IRA plan to invest in a variety of assets such as real estate, private lending, limited liability companies, precious metals, and much more!


Why Consider A SIMPLE IRA Plan?


  • Your company has less than 100 employees.
  • You want a plan with low start-up and administration costs.
  • You’re looking to add a valuable plan to your benefits package to attract quality employees.
  • You want to contribute to your employees’ retirement and yet you want the flexibility to decide how much you contribute.
  • You do not have any other retirement plans.

How To Fund A SIMPLE IRA:


  • Employee elective deferrals (also referred to as salary reduction contributions)
    • Limited to $12,500 for 2016* and 2017*
    • For employees age 50 or over, a $3,000 “catch-up” contribution is also allowed for 2016* and 2017*
  • Employer must annually choose one of the contribution methods below. The employer must tell employees during the election period which method will be used for that year
    • 2% non-elective contribution – 2% of each eligible employee’s compensation regardless of whether or how much the employee deferred, or
    • 3% matching contribution – match of employee’s elective deferrals on a dollar-for-dollar basis up to 3% of the employee’s compensation.

*Each employee’s total contributions are limited and subject to annual cost-of-living-adjustments.

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