Savings Incentive Match Plan

(SIMPLE) IRAs

SIMPLE is the acronym for Savings Incentive Match Plan for Employees. This type of plan is a tax-favored retirement plan designed for small employers. It provides the employer and the employees a simplified way to save for retirement.

• Primary advantages are low administrative costs and no complex IRS reporting requirements.
• All employer and employee contributions are tax-deductible business expenses.
• Any employer that had 100 or fewer employees who earned $5,000 or more in the preceeding calendar year, is eligible to establish a plan.  However, contributions may not be made to a SIMPLE plan if in the same year, the employer maintains another type of plan for its employees.
• Tax exempt employers and government entities also qualify as employers that are eligible to establish plans.
• The eligibility requirements for participation may be restricted to those employees who will receive at least $5,000 in compensation in the current year and who have also received at least $5,000 in compensation in any two preceding years.  However, employers may use less restrictive requirements if desired.
• Each eligible employee may make pre-tax salary deferral contributions of up to $10,000 in 2005.  If an employee is age 50 or older, then the deferral limit is increased to $12,000.
• Employers are required to make contributions for employees and may choose one of the following funding options:

                    Contribute as a match contribution, one dollar for  

                    every dollar that an employee defers, up to the

                    lesser 3% of an employee's compensation or

                    $10,000 ($12,000 if age 50 or older).  However,

                    the employer has the option of reducing the match

                    to 1% rather than 3% in every 2 out of 5 years.

                    OR

                    Contribute the lesser of 2% of compensation or    

                    $4,200 for each eligible employee.

• All employee and employer contributions are immediately 100% vested.

For more information on SIMPLE Plans, contact your Parker/Hunter Financial Consultant. Or compare plans with our Retirement Plans Overview.

We know you're thinking about your retirement.

So are we.

Our 2005 Investor Education Workshops are designed with your retirement in mind.  Join us to learn the latest retirement planning options and provide strategies for you to consider whether you are in the preparation, planning, management, or distribution stage of retirement.  These workshops are open to all types of investors.  We welcome your attendance at each workshop, if appropriate for your situation, for a complete understanding of how you can be in control of your retirement plan.

< Back to Retirement Plans