A SIMPLE IRA is a type of retirement account for small business owners and their employees. In this article, we will go over SIMPLE IRA basics.
Who Can Create a SIMPLE IRA Account
SIMPLE IRA accounts are available to any small business with less than 100 employees. The company cannot have any other retirement plans already in place.
Who Can Contribute to a SIMPLE IRA
There are two requirements that employees must meet to contribute to a SIMPLE IRA. First, they must have earned at least $5,000 during any two years before the current calendar year. Second, they must expect to receive at least $5,000 in compensation during the current calendar year. If an employer chooses, they can lessen these requirements, but they cannot make them more restrictive.
However, an employer can exclude employees who are covered by a union agreement with retirement benefits that were bargained fairly between the union and the employer. Employees can also exclude non-resident alien employees who do not have U.S. wages or other compensation from the employer.
Setting Up a SIMPLE IRA
Setting up a SIMPLE IRA is as easy as contacting a plan administrator to start the process. They can walk you through and complete all of the work for you.
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