skip navigation

Search Help
Navigation Help

Topic Index
ABCDEFGHI
JKLMNOPQR
STUVWXYZ#

Affordable Care Act
Tax Topic Index

International
Tax Topic Index

FAQs
Forms
Publications
Tax Topics

Comments
About Tax Map

IRS.gov Website
Publication 590
taxmap/pubs/p590-019.htm#en_us_publink1000231097

Chapter 3
Savings Incentive Match Plans for Employees (SIMPLE)(p77)

taxmap/pubs/p590-019.htm#en_us_publink1000270054Introduction

This chapter is for employees who need information about savings incentive match plans for employees (SIMPLE plans). It explains what a SIMPLE plan is, contributions to a SIMPLE plan, and distributions from a SIMPLE plan.
Under a SIMPLE plan, SIMPLE retirement accounts for participating employees can be set up either as: This chapter only discusses the SIMPLE plan rules that relate to SIMPLE IRAs. See chapter 3 of Publication 560 for information on any special rules for SIMPLE plans that do not use IRAs.
Deposit
If your employer maintains a SIMPLE plan, you must be notified, in writing, that you can choose the financial institution that will serve as trustee for your SIMPLE IRA and that you can roll over or transfer your SIMPLE IRA to another financial institution. See Rollovers and Transfers Exception, later under When Can You Withdraw or Use Assets.
taxmap/pubs/p590-019.htm#en_us_publink1000231100

What Is a SIMPLE Plan?(p77)

rule
A SIMPLE plan is a tax-favored retirement plan that certain small employers (including self-employed individuals) can set up for the benefit of their employees. See chapter 3 of Publication 560 for information on the requirements employers must satisfy to set up a SIMPLE plan.
A SIMPLE plan is a written agreement (salary reduction agreement) between you and your employer that allows you, if you are an eligible employee (including a self-employed individual), to choose to:
All contributions under a SIMPLE IRA plan must be made to SIMPLE IRAs, not to any other type of IRA. The SIMPLE IRA can be an individual retirement account or an individual retirement annuity, described in chapter 1. Contributions are made on behalf of eligible employees. (See Eligible Employees below.) Contributions are also subject to various limits. (See How Much Can Be Contributed on Your Behalf, later.)
In addition to salary reduction contributions, your employer must make either matching contributions or nonelective contributions. See How Are Contributions Made, later.
Deposit
You may be able to claim a credit for contributions to your SIMPLE plan. For more information, see chapter 4.
taxmap/pubs/p590-019.htm#en_us_publink1000231108

Eligible Employees(p77)

rule
You must be allowed to participate in your employer's SIMPLE plan if you:
taxmap/pubs/p590-019.htm#en_us_publink1000231109

Self-employed individual.(p77)

rule
For SIMPLE plan purposes, the term employee includes a self-employed individual who received earned income.
taxmap/pubs/p590-019.htm#en_us_publink1000231110

Excludable employees.(p77)

rule
Your employer can exclude the following employees from participating in the SIMPLE plan.
taxmap/pubs/p590-019.htm#en_us_publink1000231111

Compensation.(p77)

rule
For purposes of the SIMPLE plan rules, your compensation for a year generally includes the following amounts.
taxmap/pubs/p590-019.htm#en_us_publink1000231112

Self-employed individual compensation.(p77)

rule
For purposes of the SIMPLE plan rules, if you are self-employed, your compensation for a year is your net earnings from self-employment (Schedule SE (Form 1040), Section A, line 4, or Section B, line 6) before subtracting any contributions made to a SIMPLE IRA on your behalf.
For these purposes, net earnings from self-employment include services performed while claiming exemption from self-employment tax as a member of a group conscientiously opposed to social security benefits.