What Is a SIMPLE IRA?

    SIMPLE IRAs operate like traditional IRAs, but with unique features that cater to the self-employed and small businesses with up to 100 employees. “SIMPLE” is an acronym for Savings Incentive Match Plan for Employees, emphasizing contributions from both employees and employers.


    How much can you contribute to a SIMPLE IRA?

    • As of 2024, the annual employee contribution limit is $16,000.
    • Employees age 50+ can contribute an extra $3,500/year.
    • Employers must match employee contributions dollar-for-dollar up to 3% of the employee’s salary or a fixed 2% regardless of contributions.

    How Does a SIMPLE IRA Work?

    Opening a SIMPLE IRA requires no minimum investment. Employees can choose from diverse investment options for their SIMPLE IRAs, including stocks, bonds, exchange-traded funds, mutual funds, and CDs. Contributions reduce taxable income and grow tax-deferred over the aging period until they’re withdrawn in retirement.

    Employer contributions to SIMPLE IRAs are tax-deductible as business expenses. Also, SIMPLE IRAs are exempt from nondiscrimination testing and annual IRS filings, making them easier and less costly to administer.

    SIMPLE IRA Eligibility and Withdrawal Rules

    Eligible employees include those earning at least $5,000 annually in any two preceding years and part-time employees with 500 hours per year over three years. 

    Taxable withdrawals can be made starting at age 59½, with 10% - 25% penalties for withdrawal before this time. Exceptions include penalty-free withdrawals up to $5,000 for child adoption or birth under the SECURE Act. 

    Participants must begin taking a Required Minimum Distribution (RMD) starting at age 73. 

    Plan Your Retirement and Learn More About SIMPLE Plans

    Choosing a SIMPLE plan enhances employee benefits while strengthening your own retirement preparation. Start planning with EP Wealth advisors who excel at providing retirement strategies and assisting with SIMPLE IRA implementation.

    Ready to get started? Our retirement planning advisors are here to help you understand the ins and outs of SIMPLE IRAs and your other options. Contact an EP Wealth advisor.

    DISCLOSURES

    • Information presented is general in nature and should not be viewed as a comprehensive analysis of the topics discussed. It is intended to serve as a tool containing general information that should assist you in the development of subsequent discussions. Content does not involve the rendering of personalized investment advice nor is it intended to supplement professional individualized advice.  
    • Offering a SIMPLE IRA plan to employees does not guarantee the caliber of talent attracted to and maintained within your company. This also does not guarantee the type of success within your company. 
    • Hiring a qualified advisor and/or financial planner does not guarantee investment success, and does not ensure that a client or prospective client will experience a higher level of performance or results. No guaranty or warranty is made that any direct or implied results or projections being represented here will be met or sustained.
    • The need for a financial advisor or financial planner and/or the type of services required are specific to the uniqueness of each individual’s circumstances. There is no guarantee or warrantee that the services offered by EP Wealth Advisors, LLC will satisfy your specific financial services requirements. Services offered by other advisors may align more to your specific needs.  
    • All investment strategies have the potential for profit or loss. Different types of investments and investment strategies involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for a client's portfolio. The risk of loss can never be eliminated even if working with a professional. 
    • EP Wealth Advisors, LLC. is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the advisor has attained a particular level of skill or ability
    • Request an appointment with an EP Wealth Advisor when you have a minimum of $500,000 in investable assets – which includes qualified retirement plans (IRA, Roth IRA, 401(k), taxable brokerage, cash (savings / checking) and CDs. Investable assets do not include your home, vehicles, or collectibles.
    • The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisors.  Before making any decision or taking any action, you should consult with a professional tax advisor who has been provided with all pertinent facts relevant to your situation. EP Wealth Advisors is not in the business of providing legal or tax advice. Please consult with a CPA, tax professional, and/or attorney regarding your specific situation

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