In short
A Savings Incentive Match Plan for Employees (SIMPLE) lets employers with 100 or fewer employees and no other plan offer employee salary deferrals, with an employer match of up to 3% of pay or a 2% contribution for all eligible employees.
Key takeaways
- Deferral limits are lower than for 401(k) plans.
- Withdrawals in the first 2 years of participation before age 59½ face a 25% additional tax.
- It is cheap and simple to run, with no annual filing.
Where it's tested
TCP: Retirement Planning Strategies — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
A taxpayer has $90,000 in traditional IRAs, of which $9,000 represents nondeductible (after-tax) contributions. The taxpayer converts $10,000 to a Roth IRA. How much of the conversion is taxable?