Wealth &
Protection Planning



The (Savings Incentive Match Plan for Employees) SIMPLE IRA is a business-sponsored retirement plan that allows employees to make pre-tax salary deferrals of up to $12,500 (2018), $15,500 if age 50 or older (2018) annually.  For existing businesses, the plan must be established between Jan. 1 and Oct. 1 of the calendar year. 


To allow employees to save for retirement through salary deferral, which lowers the contributing employee's taxable income, and to help attract and retain quality employees. 


This plan is suitable for sole proprietors, partnerships, and corporations that do not maintain, during any part of the calendar year, another qualified plan with respect to which contributions are made or benefits are accrued for service in the calendar year.  The employer may not have more than 100 employees who have earned at least $5,000 in compensation for the prior year.  Nonprofit organizations, including government entities, may sponsor these plans. 

Product Features
  • Employee Contributions - In 2018, participants can defer up to $12,500 ($15,500 if age 50 or older) of salary per year and contributions grow tax-deferred.  The ability to defer the full amount may be impacted if the individual participates in more than one salary deferral plan.  
  • Administrative Cost - An IRS Form 5500 is not required to be filed with the IRS so the SIMPLE IRA is one of the least costly business retirement plans.  
  • Eligibility - Generally, any employee who had at least $5,000 compensation in any two previous years and is reasonably expected to receive $5,000 compensation in the current year is eligible to participate.  The employer may be able to exclude union employees.  
  • Required Contributions - The employer is required to make either a dollar-for-dollar match up to three percent of compensation or a two-percent non-elective contribution to all eligible participants.  The contribution is based on annual compensation, regardless of the effective date of the plan.  Employer contributions must be deposited by the business' tax filing deadline, plus extensions.  
  • Early Withdrawal Penalty - For distribution prior to 59 1/2, a 25 percent penalty applies to withdrawals taken during the first two-year period of participation.  After this period, a 10 percent penalty applies.  Exceptions do apply.  
  • Flexibility - Dollars can be placed in a variety of investments, depending on retirement objectives. 

Contact a STRIVE Wealth Advisor for more information about SIMPLE IRAs. 

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