Keep your retirement plan SIMPLE
Tax Tip of the Week
September 21, 2015
Keep your retirement plan SIMPLE
Are you thinking about starting a retirement plan for your business? Take a look at a Savings Incentive Match Plan for Employees (SIMPLE). A SIMPLE is a straightforward tax-favored retirement plan for businesses with 100 or fewer employees. Here's how SIMPLEs work.
- Set up. You select a bank, mutual fund, or other approved financial institution to maintain your plan. Establishing your SIMPLE means completing a "model plan document" — generally an IRS form that spells out the terms of your plan, such as the definition of eligible employees and how contributions can be made. You keep the form with your other business legal papers.
- Reporting requirements. Your reporting requirements to the IRS are minimal. There are no annual forms for the SIMPLE. You only have to report information such as an employee's contributions on each contributing employee's Form W-2. Once a year, you'll need to provide your employees with information statements that include a description of how the SIMPLE works, whether your employees are eligible to contribute, and how they can start or change their contributions.
- Fixing mistakes. If you make a mistake in the administration of your SIMPLE, such as accidentally forgetting to include an eligible employee, the fix could be as easy as taking corrective action to bring the employee into the plan.
- Terminating your plan. To end your SIMPLE, you need to notify your employees and your financial institution. You'll have to leave the plan open for the entire calendar year and fund the contributions as you stated you would in the annual reporting requirement that you gave your employees. No notification to the IRS is necessary.
Give us a call if you're ready to establish a retirement plan for your business. We'll help you examine your options and choose the plan that works best for you.
"Tax Tips" are published weekly to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office.
The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.
© MC 2015
September 21, 2015
Keep your retirement plan SIMPLE
Are you thinking about starting a retirement plan for your business? Take a look at a Savings Incentive Match Plan for Employees (SIMPLE). A SIMPLE is a straightforward tax-favored retirement plan for businesses with 100 or fewer employees. Here's how SIMPLEs work.
- Set up. You select a bank, mutual fund, or other approved financial institution to maintain your plan. Establishing your SIMPLE means completing a "model plan document" — generally an IRS form that spells out the terms of your plan, such as the definition of eligible employees and how contributions can be made. You keep the form with your other business legal papers.
- Reporting requirements. Your reporting requirements to the IRS are minimal. There are no annual forms for the SIMPLE. You only have to report information such as an employee's contributions on each contributing employee's Form W-2. Once a year, you'll need to provide your employees with information statements that include a description of how the SIMPLE works, whether your employees are eligible to contribute, and how they can start or change their contributions.
- Fixing mistakes. If you make a mistake in the administration of your SIMPLE, such as accidentally forgetting to include an eligible employee, the fix could be as easy as taking corrective action to bring the employee into the plan.
- Terminating your plan. To end your SIMPLE, you need to notify your employees and your financial institution. You'll have to leave the plan open for the entire calendar year and fund the contributions as you stated you would in the annual reporting requirement that you gave your employees. No notification to the IRS is necessary.
Give us a call if you're ready to establish a retirement plan for your business. We'll help you examine your options and choose the plan that works best for you.
"Tax Tips" are published weekly to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office.
The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.
