Keep your SIMPLE plan compliant
Tax Tip of the Week
September 8, 2014
Keep your SIMPLE plan compliant
When was the last time you looked at your business retirement plan? If you offer a straightforward option such as the Savings Incentive Match Plan for Employees (SIMPLE), the answer may be... not since establishing the plan.
That's understandable, since SIMPLE plans require no discrimination testing and no annual government reporting. Still, SIMPLE plans do have rules, and keeping your plan current and compliant helps you retain tax benefits.
Here are three items to review.
- The participation status of your employees. Make sure you haven't overlooked workers who became eligible to participate in your plan. Generally, eligible employees include those who earned at least $5,000 during any two prior years and who you expect to pay at least $5,000 this year.
- Your calculation of employee compensation. The contributions your employees make and the contributions your business makes depend on calculating compensation correctly. For purposes of SIMPLE contributions, compensation means regular pay as well as overtime, bonuses, and commissions.
- Timely deposits of contributions. Contributions made by your employees must be deposited with the trustee of your plan within 30 days after the end of the month they were withheld. Your employer matching contributions are due on the same date as your federal income tax return. Other things to check include making sure your plan is using the correct model plan agreement and that you're providing employees with required notices each year.
Give us a call. We're here to help you make sure your retirement plan continues to offer all the benefits available.
"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 2014
September 8, 2014
Keep your SIMPLE plan compliant
When was the last time you looked at your business retirement plan? If you offer a straightforward option such as the Savings Incentive Match Plan for Employees (SIMPLE), the answer may be... not since establishing the plan.
That's understandable, since SIMPLE plans require no discrimination testing and no annual government reporting. Still, SIMPLE plans do have rules, and keeping your plan current and compliant helps you retain tax benefits.
Here are three items to review.
- The participation status of your employees. Make sure you haven't overlooked workers who became eligible to participate in your plan. Generally, eligible employees include those who earned at least $5,000 during any two prior years and who you expect to pay at least $5,000 this year.
- Your calculation of employee compensation. The contributions your employees make and the contributions your business makes depend on calculating compensation correctly. For purposes of SIMPLE contributions, compensation means regular pay as well as overtime, bonuses, and commissions.
- Timely deposits of contributions. Contributions made by your employees must be deposited with the trustee of your plan within 30 days after the end of the month they were withheld. Your employer matching contributions are due on the same date as your federal income tax return. Other things to check include making sure your plan is using the correct model plan agreement and that you're providing employees with required notices each year.
Give us a call. We're here to help you make sure your retirement plan continues to offer all the benefits available.
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 2014
