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Who Can Participate in a SIMPLE IRA Plan?
An employee (including a self-employed individual) who:
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earned at least $5,000 in compensation during any 2 years before the current calendar year and
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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:
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Employees covered by a union agreement and whose retirement benefits were bargained for in good faith by the employees' union and the employer
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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
- SIMPLE IRA plan contribution limits
- Required minimum distributions (RMDs)
- Early withdrawals
- Saving for retirement - investments, automatic enrollment, rollovers, loans, hardship withdrawals and distributions
Additional resources
- SIMPLE IRA plans home page
- Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans)
- Publication 4334, SIMPLE IRA Plans for Small Businesses
- Publication 4284, SIMPLE IRA Plan Checklist
- FAQs regarding SIMPLE IRA plans
Page Last Reviewed or Updated: 15-Mar-2016