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Who Can Participate in a SIMPLE IRA Plan?

An employee (including a self-employed individual) who:

  • earned at least $5,000 in compensation during any 2 years before the current calendar year and
  • expects to receive at least $5,000 during the current calendar year.

An employer can use less restrictive participation requirements, but not more restrictive ones. For example, an employer can eliminate or reduce the prior or current year compensation amounts. Employers cannot impose any other conditions for participating in a SIMPLE IRA plan.

Example: Employer A allows participation for employees who received at least $3,000 in compensation during any preceding calendar year.

An employer can exclude the following employees from a SIMPLE IRA plan:

  • Employees covered by a union agreement and whose retirement benefits were bargained for in good faith by the employees' union and the employer
  • Nonresident alien employees who do not have U.S. wages, salaries or other personal services compensation from the employer

Contributions, withdrawals and benefits of saving

Additional resources

 

Page Last Reviewed or Updated: 14-Aug-2014