Question

Which of the following are correct regarding SIMPLEs?

a. An employer can maintain a SEP and a SIMPLE at the same time covering the same employees.

b. A SIMPLE is predominantly an employer contribution plan.

c. Once deposited in a SIMPLE IRA, funds can be distributed by the participant.

d. Employers must provide a matching contribution to employees covered by a SIMPLE.

Answer 1

Savings Incentive Match Plans for Employees, referred to as “SIMPLEs,” are retirement plans for small employers. SIMPLEs provide an incentive to small employers to adopt retirement plans because of the ease with which they can be established and maintained compared to the requirements and administrative obstacles required for establishing and maintaining other retirement plans. A SIMPLE allows employees to make elective deferral contributions while requiring employers to match these contributions or make nonelective contributions.

The following are correct regarding SIMPLEs:

d. Employers must provide a matching contribution to employees covered by a SIMPLE.