- What is a SIMPLE IRA plan?
- Can any employer establish a SIMPLE IRA plan?
- Are tax-exempt employers and governmental entities permitted to maintain SIMPLE IRA plans?
- How is a SIMPLE IRA plan established?
- Is there a deadline to set up a SIMPLE IRA plan?
- Can a SIMPLE IRA plan be maintained on a fiscal-year basis?
- Is there a grace period that can be used by an employer that ceases to satisfy the 100-employee limitation?
- Can an employer make contributions under a SIMPLE IRA plan for a calendar year if it maintains another qualified plan?
- Must an employer establish a SIMPLE IRA plan on January 1?
- When must a SIMPLE IRA be established for an employee?
- What if an eligible employee entitled to a contribution is unwilling or unable to set up a SIMPLE IRA?
- Are there any "pre-approved" documents an employer may use to establish a SIMPLE IRA plan?
- How is a SIMPLE plan amended for EGTRRA?
What is a SIMPLE IRA plan?
A SIMPLE IRA plan is an IRA-based plan that gives small employers a simplified method to make contributions toward their employees' retirement and their own retirement. Under a SIMPLE IRA plan, employees may choose to make salary reduction contributions and the employer makes matching or nonelective contributions. All contributions are made directly to an Individual Retirement Account or Individual Retirement Annuity (IRA) set up for each employee (a SIMPLE IRA). SIMPLE IRA plans are maintained on a calendar-year basis. See IRS Publication 560, IRS Publication 590 and IRS Notice 98-4 for detailed information on SIMPLE IRA plans.
Can any employer establish a SIMPLE IRA plan?
SIMPLE IRA plans may be established only by employers that had no more than 100 employees who earned $5,000 or more in compensation during the preceding calendar year (the "100-employee limitation"). For purposes of the 100-employee limitation, all employees employed at any time during the calendar year are taken into account, regardless of whether they are eligible to participate in the SIMPLE IRA plan. Thus, employees who are excludable under the rules of Internal Revenue Code section 410(b)(3) or who have not met the plan's minimum eligibility requirements must be taken into account. Employees also include self-employed individuals described in section 401(c)(1) who received earned income from the employer during the year.
Are tax-exempt employers and governmental entities permitted to maintain SIMPLE IRA plans?
Yes. Excludable contributions may be made to the SIMPLE IRA of employees of tax-exempt employers and governmental entities on the same basis as contributions made to employees of other eligible employers.
How is a SIMPLE IRA plan established?
A SIMPLE IRA plan is established by adopting a SIMPLE IRA plan document and setting up SIMPLE IRAs for the eligible employees. There are three basic steps in setting up a SIMPLE IRA plan, all of which must be satisfied.
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A SIMPLE IRA plan may be established by adopting an IRS model SIMPLE IRA plan using either Form 5305-SIMPLE (if all contributions are required to be deposited initially at a designated financial institution) or Form 5304-SIMPLE (if each employee is permitted to choose the financial institution for receiving contributions). A prototype SIMPLE IRA plan that has been approved by the IRS may also be used. Approved prototype SIMPLE IRA plans are offered by banks, insurance companies, and other qualified financial institutions.
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Each eligible employee must be provided with certain information about the SIMPLE IRA plan and the SIMPLE IRA where contributions for that employee will be deposited. The information must be provided each year prior to the employees' election period. Generally, the election period is 60 days prior to January 1 of a calendar year.
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A SIMPLE IRA must be set up for each eligible employee. Either IRS model Form 5305-S (a trust account) or Form 5305-SA (a custodial account) may be used. SIMPLE IRAs can be set up with banks, insurance companies, or other qualified financial institutions. The SIMPLE IRA is owned and controlled by the employee and the SIMPLE IRA plan contributions are sent to the financial institution where the SIMPLE IRA is maintained.
See IRS Publication 560, the Instructions to Form 5305-SIMPLE and Form 5304-SIMPLE, and IRS Notice 98-4 for information on establishing a SIMPLE IRA plan.
Is there a deadline to set up a SIMPLE IRA plan?
A SIMPLE IRA plan can be set up effective on any date between January 1 and October 1, provided the plan sponsor did not previously maintain a SIMPLE IRA plan. If a SIMPLE IRA plan was previously established, a SIMPLE IRA plan may be set up effective only on January 1.
Can a SIMPLE IRA plan be maintained on a fiscal-year basis?
A SIMPLE IRA plan may only be maintained on a calendar-year basis.
Is there a grace period that can be used by an employer that ceases to satisfy the 100-employee limitation?
An employer that previously maintained a SIMPLE IRA plan is treated as satisfying the 100-employee limitation for the 2 calendar years immediately following the calendar year for which it last satisfied the 100-employee limitation. However, if the failure to satisfy the 100-employee limitation is due to an acquisition, disposition or similar transaction involving the employer, then the 2-year grace period will apply only in accordance with rules similar to the rules of section 410(b)(6)(C)(i).
Can an employer make contributions under a SIMPLE IRA plan for a calendar year if it maintains another qualified plan?
Generally, an employer cannot make contributions under a SIMPLE IRA plan for a calendar year if the employer, or a predecessor employer, maintains a qualified plan (other than the SIMPLE IRA plan) under which any of its employees receives an allocation of contributions in a defined contribution plan or receives an accrual in a defined benefit plan for any plan year beginning or ending within that calendar year. In applying these rules, transfers, rollovers or forfeitures are disregarded, except to the extent forfeitures replace otherwise required contributions. “Qualified plan” means a plan, contract, pension or trust described in section 219(g)(5) and includes a plan qualified under section 401(a), a qualified annuity plan described in section 403(a), an annuity contract described in section 403(b), a plan established for employees of a State, a political subdivision or by an agency or instrumentality of any State or political subdivision (other than an eligible deferred compensation plan described in section 457(b)), a simplified employee pension ("SEP") described in section 408(k), a trust described in section 501(c)(18), and a SIMPLE IRA plan described in section 408(p). This "no-other-plan limitation" applies on a year-by-year basis. Thus, an employer cannot establish a SIMPLE IRA plan for a calendar year if the employer has another plan that is active during any plan year of the other plan that overlaps with the calendar year.
However, an employer can make contributions under a SIMPLE IRA plan for a calendar year even though it maintains another qualified plan if either:
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The other qualified plan maintained by the employer covers only employees covered under a collective bargaining agreement for which retirement benefits were the subject of good faith bargaining and the SIMPLE IRA plan excludes these employees.
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The other qualified plan is maintained by the employer during the calendar year in which an acquisition, disposition or similar transaction occurs (or the following calendar year); the requirements of this question would have been satisfied if the transaction had not occurred (and thus the employer maintaining the SIMPLE IRA plan had remained a separate employer); and only individuals who would have been employees of that "separate" employer are eligible to participate in the SIMPLE IRA plan.
Must an employer establish a SIMPLE IRA plan on January 1?
An existing employer may establish a SIMPLE IRA plan effective on any date between January 1 and October 1 of a year, provided that the employer (or any predecessor employer) did not previously maintain a SIMPLE IRA plan. This requirement does not apply to a new employer that comes into existence after October 1 of the year the SIMPLE IRA plan is established if the employer establishes the SIMPLE IRA plan as soon as administratively feasible after the employer comes into existence. If an employer (or predecessor employer) previously maintained a SIMPLE IRA plan, the employer may establish a SIMPLE IRA plan effective only on January 1 of a year.
When must a SIMPLE IRA be established for an employee?
A SIMPLE IRA is required to be established for an employee prior to the first date by which a contribution is required to be deposited into the employee's SIMPLE IRA.
What if an eligible employee entitled to a contribution is unwilling or unable to set up a SIMPLE IRA?
If an eligible employee who is entitled to a contribution under a SIMPLE IRA plan is unwilling or unable to set up a SIMPLE IRA with any financial institution prior to the date on which the contribution is required to be made to the SIMPLE IRA of the employee, an employer must execute the necessary documents to establish a SIMPLE IRA on the employee's behalf with a financial institution selected by the employer.
Are there any "pre-approved" documents an employer may use to establish a SIMPLE IRA plan?
Yes. The Service has issued two model forms: Form 5305-SIMPLE (for use with a Designated Financial Institution (DFI)), which is a form that may be used by an employer establishing a SIMPLE IRA plan with a financial institution that is a DFI; and Form 5304-SIMPLE (not subject to the Designated Financial Institution rules), which is the model form that may be used by an employer to establish a SIMPLE IRA plan that does not use a DFI. Alternatively, an employer can use an approved "prototype" plan, offered by many banks and mutual funds. Prototype plans are plans that are sponsored by financial institutions or firms that specialize in retirement plans and that have been reviewed by the Service to ensure that the language in the documents meets the requirements for SIMPLE IRA plans. Periodically, employers must adopt amended documents, either prototype or model form, to reflect law changes. The financial institution where the SIMPLE IRAs are maintained usually takes care of amending the documents and sending them to employers for adoption. Rev. Proc. 2002-10, 2002-1 C.B. 401, required that all prototype and model SIMPLE IRAs and SIMPLE IRA plans be updated for EGTRRA, generally, by the end of 2002.
How is a SIMPLE IRA plan amended for EGTRRA?
If a prototype plan is used, the plan sponsor should have received an amended plan from the financial institution that provided it. If a new plan document wasn’t received, contact the financial institution. While the financial institution provides many administrative services for plans, it is the plan sponsor’s responsibility to ensure that the plan is kept up-to-date with current law.
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Participation
- Which employees of an employer must be eligible to participate under a SIMPLE IRA plan?
- May a participant "opt out" of a SIMPLE IRA plan?
- Are there employees who may be excluded?
- May an employer impose less restrictive eligibility requirements?
- May an employee participate in a SIMPLE IRA plan if he or she also participates in a plan of a different employer for the same year?
Which employees of an employer must be eligible to participate under a SIMPLE IRA plan?
If an employer establishes a SIMPLE IRA plan, all employees of the employer who received at least $5,000 in compensation from the employer during any 2 preceding calendar years (whether or not consecutive) and who are reasonably expected to receive at least $5,000 in compensation during the calendar year, must be eligible to participate in the SIMPLE IRA plan for the calendar year. If an employee meets the conditions described in this paragraph (or such lesser conditions imposed by an employer) and is not excluded, then the employee must be covered by the SIMPLE IRA plan.
May a participant "opt out" of a SIMPLE IRA plan?
An employee may not "opt out" of participation. Of course, any eligible employee may choose not to make salary reduction contributions for a year, in which case such employee would accrue no employer matching contributions for the year, but would receive an employer nonelective contribution for the year if the plan provides for such contributions for the year.
Are there employees who may be excluded?
Yes. An employer, at its option, may exclude from eligibility employees described in section 410(b)(3). These employees are:
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Employees who are included in a unit of employees covered by an agreement that the Secretary of Labor finds to be a collective bargaining agreement between employee representatives and one or more employers, if there is evidence that retirement benefits were the subject of good faith bargaining between such employee representatives and such employer or employers;
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In the case of a trust established or maintained pursuant to an agreement that the Secretary of Labor finds to be a collective bargaining agreement between air pilots represented in accordance with Title II of the Railway Labor Act and one or more employers, all employees not covered by that agreement; and
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Employees who are nonresident aliens and who received no earned income (within the meaning of section 911(d)(2)) from the employer that constitutes income from sources within the United States (within the meaning of section 861(a)(3)).
May an employer impose less restrictive eligibility requirements?
An employer may impose less restrictive eligibility requirements by eliminating or reducing the prior year compensation requirements, the current year compensation requirements, or both, under its SIMPLE IRA plan. For example, the employer could allow participation for employees who received $3,000 in compensation during any preceding calendar year. However, the employer cannot impose any other conditions on participation in a SIMPLE IRA plan.
May an employee participate in a SIMPLE IRA plan if he or she also participates in a plan of a different employer for the same year?
An employee may participate in a SIMPLE IRA plan even if he or she also participates in a plan of a different employer for the same year. However, the employee's salary reduction contributions are subject to the limitations of section 402(g), which provides an aggregate limit on the exclusion for elective deferrals for any individual. Similarly, an employee who participates in a SIMPLE IRA plan and an eligible deferred compensation plan described in section 457(b) is subject to the limitations described in section 457(c). An employer that establishes a SIMPLE IRA plan is not responsible for monitoring compliance with either of these limitations.
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Definition of Compensation
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What definition of compensation applies for purposes of the SIMPLE IRA plan rules in the case of an individual who is not a self-employed individual?
For purposes of the SIMPLE IRA plan rules, in the case of an individual who is not a self-employed individual, compensation means the amount described in section 6051(a)(3) (wages, tips, and other compensation from the employer subject to income tax withholding under section 3401(a)), and amounts described in section 6051(a)(8), including elective contributions made under a SIMPLE IRA plan, and compensation deferred under a section 457 plan. Compensation does not include amounts deferred under a section 125 cafeteria plan. For purposes of applying the 100-employee limitation, and in determining whether an employee is eligible to participate in a SIMPLE IRA plan (i.e., whether the employee had $5,000 in compensation for any 2 preceding years), an employee's compensation also includes the employee's elective deferrals under a section 401(k) plan, a salary reduction SEP and a section 403(b) annuity contract.
What definition of compensation applies for purposes of the SIMPLE IRA plan rules in the case of a self-employed individual?
For purposes of the SIMPLE IRA plan rules, in the case of a self-employed individual, compensation means net earnings from self-employment determined under section 1402(a), prior to subtracting any contributions made under the SIMPLE IRA plan on behalf of the individual.
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Contributions
- What type of contributions may be made to a SIMPLE IRA plan?
- How much may an employee defer under a SIMPLE IRA plan?
- How much must be contributed for employees participating in a SIMPLE IRA plan?
- Can contributions made under a SIMPLE IRA plan be made to any type of IRA?
- What is a salary reduction contribution?
- What is the annual limit on the amount of salary reduction contributions under a SIMPLE IRA plan?>
- What employer matching contribution is generally required under a SIMPLE IRA plan?
- Can the 3-percent limit on matching contributions be reduced?
- May an employer make nonelective contributions instead of matching contributions?
- When must an employer make salary reduction contributions under a SIMPLE IRA plan?
- When must an employer make matching and nonelective contributions under a SIMPLE IRA plan?
- Are there any other requirements for maintaining a SIMPLE IRA plan?
- How much of the contributions made to employees' SIMPLE IRAs may be deducted on the business's tax return?
- If a SIMPLE IRA plan fails to meet the SIMPLE IRA plan requirements, are the tax benefits for the employer and employees lost?
What type of contributions may be made to a SIMPLE IRA plan?
Each eligible employee may make a salary reduction contribution and the employer must make either a matching contribution or a nonelective contribution. No other contributions may be made under a SIMPLE IRA plan.
How much may an employee defer under a SIMPLE IRA plan?
An employee may defer up to $10,500 for 2007 and 2008 (subject to cost-of-living adjustments for later years). Employees age 50 or over can make a catch-up contribution of up to $2,500 for 2007 and 2008 (subject to cost-of-living adjustments for later years). The salary reduction contributions under a SIMPLE IRA plan are "elective deferrals" that count toward the overall annual limit on elective deferrals an employee may make to this and other plans permitting elective deferrals.
How much must be contributed for employees participating in a SIMPLE IRA plan?
In addition to the employees' salary reduction contributions, the employer is generally required to match each employee's salary reduction contribution on a dollar-for-dollar basis up to 3% of the employee's compensation. Instead of the matching contribution, the employer may choose to make nonelective contributions of 2% of the employee's compensation (compensation used for this contribution is limited to $225,000 in 2007, $230,000 in 2008 and is subject to cost-of-living adjustments for later years). If the employer chooses to make nonelective contributions, it must make them for all eligible employees whether or not they make salary reduction contributions. However, the employer may choose to give the nonelective contributions only to eligible employees who make $5,000 or more in the year, if the document so provides.
Can contributions made under a SIMPLE IRA plan be made to any type of IRA?
Contributions under a SIMPLE IRA plan may only be made to a SIMPLE IRA, not to any other type of IRA. A SIMPLE IRA is an individual retirement account described in section 408(a), or an individual retirement annuity described in section 408(b), to which the only contributions that can be made are contributions under a SIMPLE IRA plan and rollovers or transfers from another SIMPLE IRA.
What is a salary reduction contribution?
A salary reduction contribution is a contribution made pursuant to an employee's election to have an amount contributed to his or her SIMPLE IRA, rather than have the amount paid directly to the employee in cash. An employee must be permitted to elect to have salary reduction contributions made at the level specified by the employee, expressed as a percentage of compensation for the year. Additionally, an employer may permit an employee to express the level of salary reduction contributions as a specific dollar amount. An employer may not place any restrictions on the amount of an employee's salary reduction contributions (e.g., by limiting the contribution percentage), except to the extent needed to comply with the annual limit on the amount of salary reduction contributions.
What is the annual limit on the amount of salary reduction contributions under a SIMPLE IRA plan?
The maximum annual amount of salary reduction contributions (not counting catch-up contributions) that can be made on behalf of any employee under a SIMPLE IRA plan is $10,500 for 2007 and 2008. If an employee is age 50 or over, the maximum annual amount of salary reduction contributions that can be made on his or her behalf is $2,500 for 2007 and 2008. After 2008, the limitations will be adjusted by the Service to reflect any changes in the cost-of-living .
What employer matching contribution is generally required under a SIMPLE IRA plan?
Under a SIMPLE IRA plan, an employer is generally required to make a contribution on behalf of each eligible employee in an amount equal to the employee's salary reduction contributions (including catch-up contributions), up to a limit of 3 percent of the employee's compensation for the entire calendar year.
Can the 3-percent limit on matching contributions be reduced?
The 3-percent limit on matching contributions is permitted to be reduced for a calendar year at the election of the employer, but only if:
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The limit is not reduced below 1 percent;
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The limit is not reduced for more than 2 years out of the 5-year period that ends with (and includes) the year for which the election is effective; and
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Employees are notified of the reduced limit within a reasonable period of time before the 60-day election period during which employees can enter into salary reduction agreements.
In applying the rule described above, to determine whether the limit was reduced below 3 percent for a year, any year before the first year in which an employer (or a predecessor employer) maintains a SIMPLE IRA plan will be treated as a year for which the limit was 3 percent. If an employer chooses to make nonelective contributions for a year, that year also will be treated as a year for which the limit was 3 percent.
May an employer make nonelective contributions instead of matching contributions?
As an alternative to making matching contributions under a SIMPLE IRA plan, an employer may make nonelective contributions equal to 2 percent of each eligible employee's compensation for the entire calendar year. The employer's nonelective contributions must be made for each eligible employee regardless of whether the employee elects to make salary reduction contributions for the calendar year. The employer may, but is not required to, limit nonelective contributions to eligible employees who have at least $5,000 (or some lower amount selected by the employer) of compensation for the year.
For purposes of the 2-percent nonelective contribution, the compensation taken into account must be limited to the amount of compensation that may be taken into account under section 401(a)(17) for the year. The section 401(a)(17) limit for 2007 is $225,000 ($230,000 for 2008). This amount will be adjusted by the Service for subsequent years to reflect changes in the cost-of-living .
An employer may substitute the 2-percent nonelective contribution for the matching contribution for a year, only if:
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Eligible employees are notified that a 2-percent nonelective contribution will be made instead of a matching contribution; and
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This notice is provided within a reasonable period of time before the 60-day election period during which employees can enter into salary reduction agreements.
When must an employer make salary reduction contributions under a SIMPLE IRA plan?
The employer must make salary reduction contributions to the financial institution maintaining the SIMPLE IRA no later than the close of the 30-day period following the last day of the month in which amounts would otherwise have been payable to the employee in cash. The Department of Labor has indicated that most SIMPLE IRA plans are also subject to Title I of ERISA; also, under Department of Labor regulations at 29 CFR 2510.3-102, salary reduction contributions to these plans must be made to the SIMPLE IRA as of the earliest date on which the contributions can reasonably be segregated from the employer's general assets, but in no event later than the 30-day deadline described above. These rules also apply in the case of self-employed individuals. Thus, the latest day for the deposit of salary reduction contributions made on behalf of a self-employed individual for a calendar year is 30 days after the end of such year, which is January 30th.
When must an employer make matching and nonelective contributions under a SIMPLE IRA plan?
Matching and nonelective employer contributions must be made to the financial institution maintaining the SIMPLE IRA no later than the due date for filing the employer's income tax return, including extensions, for the taxable year that includes the last day of the calendar year for which the contributions are made.
Are there any other requirements for maintaining a SIMPLE IRA plan?
Yes, there is an annual employee notification requirement. Prior to the employees' 60-day election period (which generally begins on November 2nd prior to each calendar year), the employer must provide each eligible employee the following information:
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Details concerning the employee's opportunity to make or change a salary reduction;
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The employer's decision to make either a matching or nonelective contribution; and
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A summary description that is usually provided to the employer by the financial institution where the SIMPLE IRAs are maintained.
See IRS Publication 560 and the Instructions to Form 5305-SIMPLE and Form 5304-SIMPLE for information on the notification requirement.
How much of the contributions made to employees' SIMPLE IRAs may be deducted on the business's tax return?
The employer may deduct all contributions made to its employees' SIMPLE IRAs on its tax return.
If a SIMPLE IRA plan fails to meet the SIMPLE IRA plan requirements, are the tax benefits for the employer and employees lost?
Generally, tax benefits are lost if the SIMPLE IRA plan fails to satisfy the Internal Revenue Code requirements. However, the employer may be able to retain the tax benefits if it uses one of the IRS correction programs to correct a failure. In general, when correcting a failure under the program, the correction should put employees in the position they would have been had the failure not occurred.
Note: The IRS has a system of correction programs for sponsors of retirement plans that are intended to satisfy Internal Revenue Code requirements but have not met the requirements for a period of time. The IRS is accepting submissions related to the correction of SIMPLE IRA plan failures. Correcting SIMPLE IRA plan failures permits an employer to continue to provide its employees with retirement benefits on a tax-favored basis. See our Correcting Plan Errors web page.
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Distributions
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May amounts held in a SIMPLE IRA be withdrawn at any time?
Yes. An employer may not require an employee to retain any portion of the contributions in his or her SIMPLE IRA or otherwise impose any withdrawal restrictions.
What are the tax consequences when amounts are distributed from a SIMPLE IRA?
Generally, the same tax results apply to distributions from a SIMPLE IRA as to distributions from a regular IRA (i.e., an IRA described in section 408(a) or (b)). However, a special rule applies to a payment or distribution received from a SIMPLE IRA during the 2-year period beginning on the date on which the individual first participated in any SIMPLE IRA plan maintained by the individual's employer (the "2-year period").
Under this special rule, if the additional income tax on early distributions under section 72(t) applies to a distribution within this 2-year period, section 72(t)(6) provides that the rate of additional tax under this special rule is increased from 10 percent to 25 percent. If one of the exceptions to application of the tax under section 72(t) applies (e.g., for amounts paid after age 59 1/2, after death, or as part of a series of substantially equal payments), the exception also applies to distributions within the 2-year period and the 25-percent additional tax does not apply.
When does the "2-year period" described in the previous question begin?
The 2-year period described in the previous question begins on the first day on which contributions made by the individual's employer are deposited in the individual's SIMPLE IRA.
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Termination of a SIMPLE IRA Plan
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When can an employer terminate a SIMPLE IRA plan?
Other than initial establishment, SIMPLE IRA plans are maintained, or not maintained, on a whole-calendar-year basis. Once started for a year, a SIMPLE IRA plan must continue for the entire calendar year, funding all contributions promised in the employee notice. An employer may terminate a SIMPLE IRA plan prospectively, beginning with the next calendar year, after the employer has informed employees that there will be no SIMPLE IRA plan for the upcoming year.
Example: If in 2007 an employer decides to terminate its SIMPLE IRA plan as soon as possible, the employer must inform employees within a reasonable period of time before the 60-day election period ending on December 31, 2007, that there will be no SIMPLE IRA plan for 2008. For 2008 the employer may establish and maintain another kind of qualified plan for its employees and, if this other qualified plan is not operative in 2009, re-establish a SIMPLE IRA plan for 2009.
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Rollovers
- Are there any special rollover rules that apply to a distribution from a SIMPLE IRA?
- Can an amount be transferred from a SIMPLE IRA to another IRA in a tax-free trustee-to-trustee transfer?
Are there any special rollover rules that apply to a distribution from a SIMPLE IRA?
Section 408(d)(3)(G) provides that the rollover provisions of section 408(d)(3) apply to a distribution from a SIMPLE IRA during the 2-year period (described in Q&A 2 under the Distribution section above) only if the distribution is paid into another SIMPLE IRA. Thus, a distribution from a SIMPLE IRA during that 2-year period qualifies as a rollover contribution (and thus is not includable in gross income) only if the distribution is paid into another SIMPLE IRA and satisfies the other requirements of section 408(d)(3) for treatment as a rollover contribution.
Can an amount be transferred from a SIMPLE IRA to another IRA in a tax-free trustee-to-trustee transfer?
During the 2-year period (described in Q&A 2 under the Distribution section above), an amount in a SIMPLE IRA may be transferred to another SIMPLE IRA in a tax-free trustee-to-trustee transfer. If, during this 2-year period, an amount is paid from a SIMPLE IRA directly to the trustee of an IRA that is not a SIMPLE IRA, the payment is neither a tax-free trustee-to-trustee transfer nor a rollover contribution; the payment is a distribution from the SIMPLE IRA and a contribution to the other IRA that does not qualify as a rollover contribution. After the expiration of the 2-year period, an amount in a SIMPLE IRA may be transferred in a tax-free trustee-to-trustee transfer to an IRA that is not a SIMPLE IRA.
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Have A Question?
If I have questions concerning SIMPLE IRA plans, where do I go for help?
You may direct your technical and procedural questions concerning retirement plans to TE/GE Customer Account Services at (877) 829-5500 (a toll-free number). The call center is open 8:30 a.m. to 4:30 p.m. Eastern Time.
Or you may e-mail us at:
RetirementPlanQuestions@irs.gov
Note: All questions submitted via e-mail must be responded to via telephone, so please remember to include your telephone number in your message.
Or you may write us at:
Internal Revenue Service
TE/GE Division, Customer Service
P.O. Box 2508
Cincinnati, OH 45201
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