SEP IRA

Posts Tagged ‘simple ira contribution limits 2007’

Question: Minimum employer contributions to SIMPLE IRA Plans?

Hi,
I work at a company with about 15 employees. We have a SIMPLE IRA plan. My boss told us that our company matches our contributions to the plan at a rate of 2%. As he explained it, the company matches $.02 for every dollar that we contribute (up to the $10,000 limit for 2007). But on the IRS website, it states that a company can’t match less than 1% of an employee’s Contribution. If I make $50,000 and put $2,000 into the SIMPLE IRA, my company’s Contribution ($40) represents .08% of my salary. Are employers free to interpret the rules in this manner?

Answer: You already stated that the company matches 2% of your contributions up to the maximum amount allowed by law.

2% is more than 1% so he would be within the law.

Guess I don’t understand your question.

Question: Can I have both a SIMPLE IRA and a ROTH IRA? What are the Contribution limits for each?

Answer: The SIMPLE IRA is a low-maintenance retirement plan that offers many features of the more common 401(k) without the complexity, administrative burden and increased administration costs. The SIMPLE allows self-employed business owners or “side business owners” to defer up to a maximum of $6,500 a year (plus certain matching Contribution amounts) from their net business earnings
The ideal candidate for a SIMPLE is a self-employed individual who makes less than $35,000 and has the financial resources available to maximize retirement plan contributions. With a SIMPLE, the maximum Contribution would be $7,470 ($6,500 elective deferral portion plus a matching Contribution of $970) which is greater than the maximum amount allowed with a SEP or a combination Keogh plan.

The combined maximum allowed for the Traditional IRA and a Roth IRA is limited to $4,000 per year, or $4,500 for age 50 and over)