When a Simple IRA Is Right for You Part Three
July 28th, 2007
When a SIMPLE IRA is right for you � Part Three
© Copyright 2006 by Frank Mitchell
* An employer cannot maintain any other type of employee plan for a company employing a SIMPLE IRA plan. Any other plan must be terminated before a SIMPLE can be established. This is known as the “One Plan Rule.”
* Forms to fill out: Employer Agreement, Notice to Employees, Salary Reduction Agreement, & Plan Summary. (All which must be kept on file.)
* The first and last two months of each year are the only election (opt-in) periods for that year.
* The employer must provide copies to employees at the start of each calendar year.
* Every month, the employer must send the Financial Institution hosting the account a single check for all of the employees’ salary deferrals for the month, with a Participant Account Contribution sheet, specifying the amounts and ownership of that check.
* The deadline for any mandatory employer contributions (either matching or non-elective) for a calendar year can be deposited any time up to the due date for the employer’s Federal income tax return for the year, including extensions.
Employee requirements for a SIMPLE IRA:
* Each employee must complete the Salary Reduction Agreement and return it to the employer during the election period.
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