| Eligibility |
Employer: Be either a sole proprietor, business owner, in a partnership, or earn income by providing service while self-employed. In addition, must:
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Employer: Generally, have 100 or fewer employees who earned at least $5,000 in the preceding year and does not maintain another retirement plan.
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Any business with no employees other than your spouse or other owners.
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Employee
- Have reached age 21.
- Have worked for the employer in at least 3 of the last 5 years.
- Have received at least $600 in compensation.
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Employee
- Have worked for the employer for at least 2 years.
- Reasonably expected to receive $5,000 or more in compensation for the year.
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Employee
- Have reached age 21.
- Have worked for the business for at least 1 year with 1000 hours.
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| Tax Benefits |
Employer: Tax deductible contributions up to 25% of compensation
Employee: Tax deferred growth on contributions.
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Employer: Tax deductible contributions.
Employee: Tax deferment of wages and tax deferred growth on contributions.
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Employer: Tax deductible contributions
Employee: Tax deferment of wages and tax deferred growth on contributions.
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| Establishing a Plan |
Employer's tax return due date plus extensions.
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For existing businesses Oct. 1st of the calendar year.
For new businesses, after Oct. 1st as soon as administratively feasible.
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Employer Document must be signed by December 31st for a calendar year plan. |
| Responsibilities |
Employer: Must establish plan and contribute by their tax return due date plus extensions.
Employee: Must establish a Traditional or SEP IRA. |
Employer: Must sign the establishment documents by Oct. 1st and provide annual notices 60 days prior to the following plan year.
Employee: Must establish a SIMPLE IRA.
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Employer: Must establish the plan and file an IRS Form 5500 once the plan balance reaches $250,000.
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| Contributions |
Employer: Contributions can vary between the lesser of 0-25% of compensation of $53,000 per participant.
Employee: Each must receive the same percentage.
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Employer: Mandatory 3% match, or 2% of up to $12,500 ($15,500 if age 50 or older) per year.
Employee: Up to 100% of compensation, up to $12,500 ($15,500 if age 50 or older) per year.
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Employer: Smaller of 25% of compensation of $53,000. The max. compensation amount is $265,000.
Employee: Deferral maximum of $18,000 plus an additional $6,000 for individuals age 50 and older.
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Required Minimum Distributions
(RMDs) |
Begin at age 70 1/2
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Begin at age 70 1/2
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Begin at age 70 1/2
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