SEP IRA

SIMPLE IRA Eligibility Requirements, Continued

• The 2 year/$5,000 compensation requirement is the maximum Eligibility an employer may require. The employer may elect to decrease the number of years of service or the compensation requirement or both.

For example, an employer can require that an employee worked in one prior year, and made only $3,000 in that year.

• Any Eligibility Requirements the employer sets in the SIMPLE Plan apply to all employees, including the business owner.

For example, an employer started her new business, ABC Corp., on May 31, 2003 and established a SIMPLE IRA Plan effective for 2004. The maximum years of service the employer can require is one year.

What information does financial Institutions usually provide SIMPLE IRA Account owners?

To employees :

• Quarterly Account Statements (statements are sent monthly whenever there is account activity or a Contribution is made to the employee’s account.
• IRS Form 5498 showing total Contribution amounts made during the calendar year and Fair Market Value (year-end account value) of the SIMPLE IRA Account.
• IRS Form 1099-R if a distribution was paid to the SIMPLE IRA Account owner.
• Annual Summary of SIMPLE Plan Rules is sent once a year to all SIMPLE IRA owners.