Simple IRA Plan
Oak Street Advisors can help your company establish a
SIMPLE IRA retirement plan. Just call us at 843.946.9868 or
toll free at 877.946.9868. If you prefer just send us an email to
simple@oakadvisors.com.
For employers looking for a low cost way to offer a retirement
plan, the SIMPLE IRA plan is a good choice. SIMPLE IRA plans
can be established by any business with 100 or less employees
who earned or are expected to earn $5,000 per year. Tax
exempt organizations and government entities also qualify to
establish SIMPLE IRA plans. SIMPLE IRA plans are maintained
on a calendar year basis. You can establish a SIMPLE IRA plan
anytime between January 1 and October 1 of the initial plan
year. New plans or changes can only be made effective
January 1, if the plan was in existence for the previous
calendar year
Under a SIMPLE IRA plan employees can make pretax
contributions, and the employer makes matching or non
elective contributions. All contributions are made into an IRA
established for each participant. All contributions are
immediately 100% vested. Investment decisions are made by
the individual participant, and the investment choices are
limited only by IRA rules and any limitations imposed by the
custodian.
A SIMPLE IRA plan is established by adopting a SIMPLE IRA
plan document provided by the IRS or by adopting a prototype
plan that has been approved by the IRS. Prototype plans are
offered by financial service firms like banks, brokerage, and
insurance companies. Each eligible employee must be
provided with information about the plan (usually called a
summary plan description) and about the SIMPLE IRA where
the participant’s funds will be deposited.
All participants may defer 100% of eligible compensation up to
$11,500 for 2009 ($14,000 if over 50). In addition to the
employees deferral the employer is required to match dollar for
dollar up to 3% of the employee’s eligible compensation.
Rather than making matching contributions an employer can
choose to make a non elective contribution of 2% of the
employee’s eligible earnings up to $245,000 for 2009.
However, if the non elective contribution is chosen it must be
made to all eligible employees regardless of whether they
chose to make any deferral contributions. The 3% match can
be reduced if the following conditions are met; a) the matching
limit cannot be less than 1% b) the limit cannot be for more
than 2 years of a 5 year period, and c) the employees are
notified in a reasonable period of time before the 60 day
election period when employees can select deferral rates.
Participation rates do not limit the amount highly compensated
employees and business owners can contribute to a SIMPLE
IRA plan. An important distinction for business owners is that,
unlike a 401k plan, they may always make the maximum
contribution to their own account and receive the maximum
allowable match.
During the 60 day election period which generally begins
November 2 of each calendar year, the employer must provide
each eligible employee details of their opportunity to make or
change a salary deferral, the employer’s decision as to the
matching contributions or non elective contributions, and a
summary description of the plan.
Early withdrawals from SIMPLE IRA plans are allowed and may
not be restricted by the employer. However the IRS levies a
25% tax penalty for early (pre 591/2) withdrawals made in the
first two years of plan participation. After 2 years early
withdrawals are subject to a 10% penalty. Of course income
taxes are due on any withdrawals. During the initial 2 year
period SIMPLE IRA plan funds cannot be transferred or rolled
over without taxes to any account other than another SIMPLE
IRA.
Oak Street Advisors can help your company establish a
SIMPLE IRA retirement plan. Just call us at 843.946.9868 or
toll free at 877.946.9868. If you prefer just send us an email to
simple@oakadvisors.com.
Oak Street Advisors can help your company establish a
SIMPLE IRA retirement plan. Just call us at 843.946.9868 or
toll free at 877.946.9868. If you prefer just send us an email to
simple@oakadvisors.com.
For employers looking for a low cost way to offer a retirement
plan, the SIMPLE IRA plan is a good choice. SIMPLE IRA plans
can be established by any business with 100 or less employees
who earned or are expected to earn $5,000 per year. Tax
exempt organizations and government entities also qualify to
establish SIMPLE IRA plans. SIMPLE IRA plans are maintained
on a calendar year basis. You can establish a SIMPLE IRA plan
anytime between January 1 and October 1 of the initial plan
year. New plans or changes can only be made effective
January 1, if the plan was in existence for the previous
calendar year
Under a SIMPLE IRA plan employees can make pretax
contributions, and the employer makes matching or non
elective contributions. All contributions are made into an IRA
established for each participant. All contributions are
immediately 100% vested. Investment decisions are made by
the individual participant, and the investment choices are
limited only by IRA rules and any limitations imposed by the
custodian.
A SIMPLE IRA plan is established by adopting a SIMPLE IRA
plan document provided by the IRS or by adopting a prototype
plan that has been approved by the IRS. Prototype plans are
offered by financial service firms like banks, brokerage, and
insurance companies. Each eligible employee must be
provided with information about the plan (usually called a
summary plan description) and about the SIMPLE IRA where
the participant’s funds will be deposited.
All participants may defer 100% of eligible compensation up to
$11,500 for 2009 ($14,000 if over 50). In addition to the
employees deferral the employer is required to match dollar for
dollar up to 3% of the employee’s eligible compensation.
Rather than making matching contributions an employer can
choose to make a non elective contribution of 2% of the
employee’s eligible earnings up to $245,000 for 2009.
However, if the non elective contribution is chosen it must be
made to all eligible employees regardless of whether they
chose to make any deferral contributions. The 3% match can
be reduced if the following conditions are met; a) the matching
limit cannot be less than 1% b) the limit cannot be for more
than 2 years of a 5 year period, and c) the employees are
notified in a reasonable period of time before the 60 day
election period when employees can select deferral rates.
Participation rates do not limit the amount highly compensated
employees and business owners can contribute to a SIMPLE
IRA plan. An important distinction for business owners is that,
unlike a 401k plan, they may always make the maximum
contribution to their own account and receive the maximum
allowable match.
During the 60 day election period which generally begins
November 2 of each calendar year, the employer must provide
each eligible employee details of their opportunity to make or
change a salary deferral, the employer’s decision as to the
matching contributions or non elective contributions, and a
summary description of the plan.
Early withdrawals from SIMPLE IRA plans are allowed and may
not be restricted by the employer. However the IRS levies a
25% tax penalty for early (pre 591/2) withdrawals made in the
first two years of plan participation. After 2 years early
withdrawals are subject to a 10% penalty. Of course income
taxes are due on any withdrawals. During the initial 2 year
period SIMPLE IRA plan funds cannot be transferred or rolled
over without taxes to any account other than another SIMPLE
IRA.
Oak Street Advisors can help your company establish a
SIMPLE IRA retirement plan. Just call us at 843.946.9868 or
toll free at 877.946.9868. If you prefer just send us an email to
simple@oakadvisors.com.
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