A Savings Incentive Match Plan for Employees (SIMPLE) is, as the acronym suggests, a relatively simple plan to set up and administer. SIMPLE IRAs allow participant deferrals, flexible employer contributions and minimal paperwork and tax filing. Any employer with fewer than 100 employees can establish this type of plan.
Any employee who has earned at least $5,000 in the prior 2 years and is expected to earn at least $5,000 in the current year is eligible to participate. Allowable participant deferrals for 2015 are $12,500 with a catch-up provision of $3,000 for employees age 50 and older. This amount is subject to change based on inflation.
Employers have the option of contributing 2% to all eligible employees or a dollar-for-dollar match of 3% for those employees making deferrals. The 3% match is more common as it provides an incentive for employees to participate in planning for their successful retirement. However, there are a few exceptions to these guidelines.
Selecting the best option for your company requires a great deal of thought and knowledge. The professionals at Northern Financial Management have the experience to help you design and implement the right plan. We would welcome the opportunity to discuss your current strategy and other possible options for your company!