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Simple IRA

To make it easier for small employers to establish a retirement plan for themselves and their employees, Congress created the Savings Incentive Match Plans for Employees, also known as SIMPLEs. These plans are simple to administer and offer contribution options that are both flexible and substantial.

Which employers are eligible?
A SIMPLE IRA plan is generally available to both profit and non-profit employers who have 100 or fewer employees who are expected to earn at least $5,000 during the calendar year. However, generally, an employer may not have a SIMPLE plan if the employer provides benefits under another qualified retirement plan.

How much can be contributed?
The SIMPLE IRA plan is a salary deferral-type of plan resembling a traditional 401(k). Under the SIMPLE IRA plan:
  • Employees may contribute up to $11,500 ($14,000 if age 50 or greater), tax-deferred, each year.
  • Employers provide either a match of employee deferrals up to three percent of compensation, or a lower percentage (but not lower than one percent) in two of any five years, or a two percent-of-compensation contribution on each eligible employee's behalf.
  • Total annual contributions may reach as much as $23,000 ($28,000 if age 50 or greater) per participant.
What are the tax benefits?
All amounts contributed to a SIMPLE IRA are tax-deductible by the employer. Employees are not taxed on salary that they have deferred. All plan earnings are tax-deferred.

Contact your Farm Bureau Insurance agent for more information.


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