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FAQs regarding SIMPLE IRA Plans

 

These frequently asked questions and answers are provided for general information only and should not be cited as any type of legal authority. They are designed to provide the user with information required to respond to general inquiries. Due to the uniqueness and complexities of Federal tax law, it is imperative to ensure a full understanding of the specific question presented, and to perform the requisite research to ensure a correct response is provided.

The freely available Adobe Acrobat Reader software is required to view, print, and search the questions and answers listed below.

 

General
Participation
Definition of Compensation
Contributions
Distributions
Termination of a SIMPLE IRA Plan
Rollovers
Have a Question?

 



General

  1. What is a SIMPLE IRA plan?
  2. Can any employer establish a SIMPLE IRA plan?
  3. Are tax-exempt employers and governmental entities permitted to maintain SIMPLE IRA plans?
  4. When must a SIMPLE IRA be established for an employee?
  5. What if an eligible employee entitled to a contribution is unwilling or unable to set up a SIMPLE IRA?

 

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Participation

  1. Which employees of an employer must be eligible to participate under a SIMPLE IRA plan?
  2. May a participant "opt out" of a SIMPLE IRA plan?
  3. Are there employees who may be excluded?
  4. May an employer impose less restrictive eligibility requirements?
  5. 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?

 

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Definition of Compensation

  1. What definition of compensation applies for purposes of the SIMPLE IRA plan rules in case of an individual who is not self-employed individual?
  2. What definition of compensation applies for purposes of the SIMPLE IRA plan rules in the case of a self-employed individual?

 

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Contributions

  1. What type of contributions may be made to a SIMPLE IRA plan?
  2. How much may an employee defer under a SIMPLE IRA plan?
  3. How much must I contribute for my employees to a SIMPLE IRA plan?
  4. Can contributions made under a SIMPLE IRA plan be made to any type of IRA?
  5. What is a salary reduction contribution?
  6. What is the annual limit on the amount of salary reduction contributions under a SIMPLE IRA plan?
  7. What employer matching contribution is generally required under a SIMPLE IRA plan?
  8. Can the 3-percent limit on matching contributions be reduced?
  9. May an employer make nonelective contributions instead of matching contributions?
  10. When must an employer make salary reduction contributions under a SIMPLE IRA plan?
  11. When must an employer make matching and nonelective contributions under a SIMPLE IRA plan?
  12. Are there any other requirements for maintaining a SIMPLE IRA plan?

 

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Distributions

  1. May amounts held in a SIMPLE IRA be withdrawn at any time?
  2. What are the tax consequences when amounts are distributed from a SIMPLE IRA?
  3. When does the "2-year period" described in the previous question begin?

 

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Termination of a SIMPLE IRA Plan

  1. When can an employer terminate a SIMPLE IRA plan?

 

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Rollovers

  1. Are there any special rollover rules that apply to a distribution from a SIMPLE IRA?
  2. Can an amount be transferred from a SIMPLE IRA to another IRA in a tax-free trustee-to-trustee transfer?

 

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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 us in a variety of ways.

Call:

TE/GE Customer Account Services at (877) 829-5500 (toll-free number).

Telephone representatives will provide assistance with basic EP questions such as basic filing requirements and due date for Form 5500, status of pending determination letter applications and responding to notices.  Questions beyond the scope of our telephone representatives will be written up as a referral to be answered by an Employee Plans Specialist within 15 days.

In addition to your question, the following will be needed:

  • Your name
  • Telephone number
  • Best time to call
  • Address

You will be given a "reference number" that identifies the referral. 
If you are calling regarding specific technical guidance (e.g., Revenue Procedure, Notice, Regulation), please indicate the specific guidance and its author and your request will be forwarded.  Please be aware that telephone representatives are not permitted to give out e-mail addresses of IRS employees.

Write:

Internal Revenue Service
TE/GE Division, Correspondence Unit
P.O. Box 2508
Cincinnati, OH 45201

E-mail:

RetirementPlanQuestions@irs.gov
 

Due to disclosure laws, account-related questions cannot be answered via e-mail.  If you are e-mailing regarding specific technical guidance (e.g., Revenue Procedure, Notice, Regulation), please indicate the specific guidance and its author and your request will be forwarded.

Note: All questions submitted via e-mail must be responded to via telephone, so please remember to include your phone number in your message.

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Page Last Reviewed or Updated: 16-Sep-2013