Get SIMPLE IRA Deferral Agreement

Choose a SIMPLE IRA Plan Employer is required to contribute each year either a: Matching contribution up to 3% of compensation (not limited by the annual compensation limit), or. ... Employees may elect to contribute. Employee is always 100% vested in (or, has ownership of) all SIMPLE IRA money.

The elective deferral limit for SIMPLE plans is 100% of compensation or $15,500 in 2023, $14,000 in 2022, and $13,500 in 2020 and 2021. Catch-up contributions may also be allowed if the employee is age 50 or older.

Employee contributions to a SIMPLE IRA are discretionary – they can decide to contribute each year or not. Employers, however, are required to make annual contributions. Employers must provide a 100% match up to 3% of employee's contributions or provide 2% of their annual salary.

After the 2-year period, you can make tax-free rollovers from SIMPLE IRAs to other types of non-Roth IRAs, or to an employer-sponsored retirement plan. You can also roll over money into a Roth IRA after the 2-year period, but must include any untaxed money rolled over in your income.

With a SIMPLE IRA, you and your employees can put a percentage of pay aside for retirement, up to the contribution limit. The money grows tax-deferred until it's withdrawn. Employees don't pay taxes on investment growth, but they will pay income taxes when making withdrawals.

Form that allows employees to set up salary deferrals for their SIMPLE IRAs. This form is for employer and employee use only. It should not be sent back to American Funds Service Company or Capital Bank and Trust Company.

Employee SIMPLE IRA Contribution Limits for 2023 An employee cannot contribute more than $15,500 in 2023 ($14,000 in 2022) to a SIMPLE IRA. Employees age 50 or over can contribute an extra $3,500 as a catch-up contribution in 2023 ($3,000 in 2022).

Pro tip: Contributions to a SIMPLE IRA are not subject to a maximum age requirement. For example, an individual who is still employed after age 72 (70½ if the employee reached age 70½ before January 1, 2020) can continue to make SIMPLE IRA contributions.