A Savings Incentive Match Plan for Employees (SIMPLE) IRA is another type of employer plan. With a SIMPLE IRA, the employer matches up to 3% of compensation or 2% non elective and the contribution also grows tax deferred. The contribution limits for 2022 for a SIMPLE IRA is $14,000 and also allows for a $3,000 “catch-up” for those over the age of 50. For 2023, the contribution limit for a SIMPLE IRA increased to $15,500. If you are age 50 or over, the catch-up contribution limit also increased, making it possible to contribute an additional $3,500 for 2023, up from $3,000 in 2022. SIMPLE IRA distributions follow the same distribution rules as Traditional IRAs, with one significant difference. Early withdrawals generally are subject to a 10% additional tax if taken before age 59 1/2. However, the additional tax is increased to 25% if funds are withdrawn within 2 years of beginning participation in the plan. Distributions are taxed as ordinary income for the tax year of the distribution.
Check out this blog on Understanding Self-Directed Employer Plans and Which One is Right For My Business
Open your SIMPLE IRA today!
SIMPLE IRA Account Application (AdobeSign)
IRS Form SIMPLE 5305-SA (PDF)
IRS Form SIMPLE 5304 (PDF)
Quest requires employers to complete Form 5304-SIMPLE, because it permits plan participants to select the financial institution to receive their SIMPLE IRA plan contributions.
Have Questions? Contact a Certified IRA Specialist at IRASpecialists@QuestTrust.com. Forms and Requests Received Will be Processed in 24-48 hours of Quest Receiving the Form.
SIMPLE IRAs also have a few deadlines:
- Open Deadline: October 1st of current year
- Employee Fund Deadline: Defer from last paycheck or December 31st
- Employer Fund Deadline: Extended due date of the business tax return
- SIMPLE IRAs must be open for two years before transfer outs are allowed
2022 Contribution Limits:
- $14,000 (Before age 50)
- $3,000 catch-up (Age 50+)