Simple IRA Regulations

December 18th, 2007

To establish a SIMPLE IRA, a business must follow SIMPLE IRA regulations and rules. This section of SEP IRA & SIMPLE IRA website is dedicated to SIMPLE IRA regulations, compliance SIMPLE IRA Rules and guidelines. SIMPLE IRA Rules can be complicated so you should become familiar with all the SIMPLE IRA regulations before you start contributing to your SIMPLE IRA. There are also different rules governing SIMPLE IRA limit or SIMPLE IRA Contribution limits within SIMPLE IRA Plans.

Since there are many layers of SIMPLE IRA Compliance, not many people understand how SIMPLE IRA Plans work so not many businesses establish SIMPLE IRA Plans. SIMPLE IRA Compliance and SIMPLE IRA Rules are a little more complex than SEP IRA rules and other IRA rules. However, SIMPLE IRA Rules can work to the SIMPLE IRA plan owners in many cases.

How to establish a SIMPLE IRA plan? What are the steps required to establish a SIMPLE IRA plan?

Before we discuss how to establish a SIMPLE IRA plan to meet SIMPLE IRA Compliance, let’s make sure that we know that all SIMPLE IRA Plans must be maintained on a calendar year basis regardless of whether the employer uses a different tax year (i.e. fiscal year). Additionally, an employer cannot establish a SIMPLE IRA Plan if the employer maintains any other type of retirement plan for the business.

The following steps are required to set up a SIMPLE IRA plan.

Step 1: Complete the required SIMPLE IRA documents.

Employer Agreement: To establish a SIMPLE IRA Plan, the employer completes and signs the Employer Agreement and the required notices to employees, which are found in the SIMPLE Employer IRA Agreement. The completed booklet should be kept in the business’ files and is not required to be sent back to Financial Institution.

Notice to Employees : The employer completes “Name of Employer” and “Address of Employer”. This section provides the specific rules the employer chooses from the Employer Agreement (i.e., Eligibility Requirements, mid-year change dates for deferral elections, employer contributions, etc.) to employees.

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