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previous page Previous Page: Publication 590 - Individual Retirement Arrangements (IRAs) - Savings Incentive Match Plans for Employees (SIMPLE)
next page Next Page: Publication 590 - Individual Retirement Arrangements (IRAs) - How Much Can Be Contributed on Your Behalf?
 Use previous pagenext page to find additional occurrences of topic items.Index for this Publication
taxmap/pubs/p590-021.htm#en_us_publink10006555

How Are Contributions Made?(p72)


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Contributions under a salary reduction agreement are called salary reduction contributions. They are made on your behalf by your employer. Your employer must also make either matching contributions or nonelective contributions.
taxmap/pubs/p590-021.htm#en_us_publink10006556

Salary reduction contributions.(p72)


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During the 60-day period before the beginning of any year, and during the 60-day period before you are eligible, you can choose salary reduction contributions expressed either as a percentage of compensation, or as a specific dollar amount (if your employer offers this choice). You can choose to cancel the election at any time during the year.
Salary reduction contributions are also referred to as "elective deferrals."
Your employer cannot place restrictions on the contributions amount (such as by limiting the contributions percentage), except to comply with the salary reduction contributions limit, discussed under How Much Can Be Contributed on Your Behalf, later.
taxmap/pubs/p590-021.htm#en_us_publink10006557

Matching contributions.(p72)


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Unless your employer chooses to make nonelective contributions, your employer must make contributions equal to the salary reduction contributions you choose (elect), but only up to certain limits. See How Much Can Be Contributed on Your Behalf, later. These contributions are in addition to the salary reduction contributions and must be made to the SIMPLE IRAs of all eligible employees (defined earlier) who chose salary reductions. These contributions are referred to as matching contributions.
Matching contributions on behalf of a self-employed individual are not treated as salary reduction contributions.
taxmap/pubs/p590-021.htm#en_us_publink10006558

Nonelective contributions.(p73)


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Instead of making matching contributions, your employer may be able to choose to make nonelective contributions on behalf of all eligible employees. These nonelective contributions must be made on behalf of each eligible employee who has at least $5,000 of compensation from your employer, whether or not the employee chose salary reductions.
One of the requirements your employer must satisfy is notifying the employees that the election was made. For other requirements that your employer must satisfy, see Publication 560.
previous pagePrevious Page: Publication 590 - Individual Retirement Arrangements (IRAs) - Savings Incentive Match Plans for Employees (SIMPLE)
next pageNext Page: Publication 590 - Individual Retirement Arrangements (IRAs) - How Much Can Be Contributed on Your Behalf?
 Use previous pagenext page to find additional occurrences of topic items.Index for this Publication