SEP IRA

Posts Tagged ‘simple ira contributions limits’

Question: What is the difference between a TSP and a SIMPLE IRA? They have different Contribution limits?

I am talking about the Thrift Savings plan that federal employees have access to. Does anyone have a good comparison?
I have a good understanding of SIMPLE and ROTH IRAs, so if you could relate to that, I would be grateful.

Answer: I’m not a financial advisor but I’ll give this my best shot.

My understanding of the Thrift Savings Plan (TSP) is that it is an employers sponsored plan similar to a 401K in the private sector. So one of the main differences is that an Independent Retirement Account (IRA) is, as the name implies, independent, ie. not sponsored by an employer and therefore is set up by the individual employee. I believe the Federal Government may offer some type of “matching” funds, ie. if the employee puts money into the TSP the government will match it up to a certain level. If this is the case it is WAY better to invest in that than in an IRA for which you would receive no matching money from the government. I do not know if the TSP puts in before or after tax dollars. If you work for the Federal Government you can ask your personnel office for help. If you search for it online you should probably find many details.

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Question: Another question SIMPLE IRA question. Which of the following statements is/ are correct?

which of the following is/ are correct regarding SIMPLE plans?
1.A SIMPLE plan does not require annual testing.
2.A SIMPLE IRA must follow a 3 yr cliff vesting schedule if the plan is top-heavy
3.A 25% early withdrawal penalty may apply to distributions taken within the first two years of participation in a SIMPLE plan.
4.The maximum elective deferral Contribution to a SIMPLE 401K plan is $15.5k for 07 and $20.5K for o7 for an employee who has attained the age of 50.
a.3 only
b.1 and 3 only
c.1,2, and 3
d.2,3,and 4

thank you very much =)

Answer: visit this link for a trusted answer

http://www.missouribusiness.net/irs/sections/section11/simplefaqs.htm#15

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