A simple IRA (Savings Incentive Match Plan for Employees) is a version of a 401(k) plan for small businesses and is subject to many of the same rules as individual pension accounts (IRAs). This occupational pension account allows workers entitled to invest part of their salary upstream in an individual account and to obtain compulsory employer contributions. If your plan offers the employer`s automatic contribution of 2%, you will receive that money, even if you choose not to divert your salary. If the employer contribution is offered by Matching Funds, you must register to contribute a portion of your own salary to win the match. (Remember: in addition to a SIMPLE IRA, you can still save in other types of retirement accounts.) 2% of the employee`s compensation, based on a maximum salary of $285,000 in 2020 and $290,000 in 2021. Employees are not required to register for payroll fees to collect the employer contribution if your employer chooses the uns choisied 2% contribution option. If your plan uses the optional salary reduction/matching method, you need to help win the game. Small businesses – usually those employing 100 people or fewer – sometimes offer workers a SIMPLE IRA plan instead of a 401(k) because (as the acronym implies) it`s easier to set up and manage. If you work for yourself, you can also contribute to a SIMPLE IRA, although there are better retirement options for the self-employed. The contribution limits for a SIMPLE IRA in 2020 and 2021 are $13,500 per year for people under the age of 50. Individuals 50 years of age and older can contribute an additional $3,000. “Do you want to open an IRA? Here are our top tips for the best IRA providers If you work at a company that offers a SIMPLE IRA, your employer will have you fill out one of the forms above to create an individual account.
Make information about the SIMPLE IRA plan available to authorized personnel. Note: Vanguard assets in a Vanguard 529 plan, Vanguard Variable Annuity, SEP IRA multi-member plans, SIMPLE, i401k, 403(b), family partnerships, family businesses or employer-sponsored pension plans for which Vanguard provides registration services, may be included in determining authorization if you also have a personal account holding Vanguard or vanguard ETFs investment funds. Assets held in other types of accounts cannot be included in the eligibility determination.