Following is an outline of the characteristics of the SIMPLE IRA:
WHO CAN SPONSOR A SIMPLE IRA PLAN? Self-Employed individuals, Corporations, Partnerships, Exempt Organizations and LLC's are eligible to set up SIMPLE plans;
WHO IS ELIGIBLE TO PARTICIPATE? Employers can set up their own eligibility requirements provided that the length of employment requirement does not exceed 3 years and minimum annual salary requirement does not exceed $5,000;
HOW MUCH IN PRE-TAX WAGES CAN BE DEFERRED? 100% of the salary of an eligible employee up to a maximum of $7,000 per calendar year;
HOW MUCH CAN BE MATCHED BY EMPLOYER? Employer matching is allowed either dollar-for-dollar or on a "non-elective" basis up to a maximum of $7,000 per year or 3% of employee's annual salary whichever is smaller.
WHAT ARE THE TAX ADVANTAGES? Employees' contributions are tax-deferred, Employer contributions are tax-deductible.
REMEMBER THIS: The deadline for sponsoring a SIMPLE plan is October 1st.