Savings Incentive Match Plan For Employees Of Small Employers (SIMPLE)
A retirement plan that may be established by employers, including self-employed individuals. The employer is allowed a tax deduction for contributions made to the SIMPLE. The employer makes either matching or non-elective contributions to each eligible employee's SIMPLE IRA and employees may make salary deferral contributions. Investopedia Says:
The employer has two alternatives when it comes to making contributions. The first is to match the amounts that each employee makes toward his or her own elective-deferral contribution up to 3% of the employee's annual compensation. The second alternative is for the employer to make a flat 2% nonelective contribution to all qualified employees, regardless of whether the employee makes any contributions.
Contributions to SIMPLE IRAs are immediately 100% vested, and the IRA owner directs the investments. Related Terms:
Individual Retirement Account - IRA
Roth IRA
Salary Reduction Simplified Employee Pension Plan - SARSEP
Saver's Tax Credit
Simplified Employee Pension - SEP
Traditional IRA |