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 However, the additional tax is increased to 25% if funds are withdrawn within 2 years of beginning participation in the plan.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.
Open your SIMPLE IRA today!
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+)