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SIMPLE IRA Plans – Frequently Asked Questions

If you’re thinking about establishing an affordable retirement plan for your business for 2024, now is the time to set it up. Compared to 401(k) plans, SIMPLE IRA plans have minimal administrative requirements and can be an affordable way to offer your employees a retirement savings option. Here are a few frequently asked questions regarding SIMPLE IRA plans.

Is my business eligible for this type of plan?

If your business had no more than 100 employees during the previous calendar year, then you could be considered eligible. For the 100-employee limit, you must include all individuals employed at any time during the previous calendar year, including those employees who would not have met plan eligibility requirements.

What does it cost to set up this type of plan?

SIMPLE IRA plans often have no start up or ongoing plan administration cost.

Is an annual IRS filing or compliance testing required?

Unlike 401(k) and other types of retirement plans, there is no annual IRS filing or compliance testing required for a SIMPLE IRA plan.

How much can I contribute to a SIMPLE IRA plan?

Each plan participant may defer up to $16,000 of their compensation in 2024. Participants age 50 and over can also make a catch-up contribution of up to $3,500. These contributions also do not impact a participant’s limits for their own Roth IRA or Traditional IRA contributions.

How may my contributions be invested?

Unlike other types of retirement plans that may have a restricted menu of investment options, with the SIMPLE IRA each participant can select from an array of publicly traded securities to allocate their deferral and employer contributions.

As an employer, what sort of contributions must I make?

As the employer you can select from one of the two below options, and these also apply to your own deferral contributions!

  • Matching contribution: Match each participating employee’s salary reduction contribution on a dollar-for-dollar basis up to 3% of the employee’s annual compensation.
  • Non-Elective Contributions: Make non-elective contributions of 2% of each employee’s annual compensation. If you choose to make non-elective contributions, you must make them for all eligible employees whether or not they make salary reduction contributions.

If you are interested in learning more about setting up a SIMPLE IRA plan for your business, then feel free to reach out to schedule your complimentary consultation.

Meet The Author

Tyler D. Caveness

Founder & Principal Advisor

  • B.A. in Economics from Harvard University
  • Licensed Investment Advisor
  • Board of Trustees – North Cross School
  • Board of Directors – Member One Federal Credit Union
  • Past President – North Cross School Alumni Board

As a self-employed advisor and entrepreneur, I walk the same entrepreneurial path you tread each day. I grasp the blend of passion, persistence, and pragmatism that drives your decisions, because it drives mine too. This shared journey offers me unique insight into the challenges and aspirations of fellow self-employed individuals and corporate executives.

When we discuss your financial goals and hurdles, I don’t just offer advice from a textbook perspective; I offer it from a place of genuine understanding and shared experience.

Trust that when you talk, I’m not just listening – I’m truly comprehending the nuances and requirements of your journey.

I understand the angst that can arise when you are trying to plan for investment opportunities, business expansion or acquisition, estate and insurance needs for your family, dealing with business partners, trying to minimize your income tax burden, trying to secure financing for a strategic goal, etc., all while dealing with the day-to-day demands of your valuable time.

My priority is to be your most valuable resource, helping you to cut through the noise and make clear, informed financial decisions that align with your goals.

You are the visionary for your plan, and my mission is to help you hone and implement that vision.

Thank you for the opportunity,