• Steve Jones

Business Owners... Consider Setting Up a Simple IRA at Work


SIMPLE accounts may accept rollovers from expanded list of retirement plans. In general, an employer with 100 or fewer employees that doesn't have a qualified plan can establish a “SIMPLE” (savings incentive match plan for employees) retirement plan, without having to meet most requirements for qualified plans. Under prior law, the only contributions allowed to a SIMPLE retirement account were contributions under a qualified salary reduction arrangement or rollovers or transfers from another SIMPLE IRA.

Effective for contributions after Dec. 18, 2015, rollover contributions to an employee's SIMPLE retirement account are also permitted from: (1) a traditional IRA, under the rollover rules of Code Sec. 408(d)(3), (2) a qualified trust, under the rollover rules of Code Sec. 402(c), (3) a qualified annuity, under the rollover rules of Code Sec. 403(a)(4), (4) a 403(b) tax-sheltered annuity, under the rollover rules of Code Sec. 403(b)(8), and (5) a governmental section 457 plan, under the rollover rules of Code Sec. 457(e)(16). However, no rollover contribution is permitted to be made to the SIMPLE retirement account until after the 2-year period described in Code Sec. 72(t)(6), i.e., the 2-year period beginning on the date that the employee first participated in a qualified salary reduction arrangement maintained by the employee's employer. (Code Sec. 408(p)(1)(B).

#SimpleIRA #Retirement #SmallBusiness

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© 2020 by Steven R. Jones, CPA, PA

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