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Our objective is to make life easy for all retirement plan stakeholders. We do our best to thoroughly explain the features and benefits of our smart retirement solutions. Sometimes, you may still have a question. Click on these Frequently Asked Questions (FAQs) to get the information you need to understand why smart retirement solutions are best in class. 

  • What is a SIMPLE IRA Plan?
    A Savings Incentive Match Plan for Employees or SIMPLE IRA plan is a salary reduction retirement plan designed for small companies with 100 or fewer eligible employees (generally, those who earned at least $5,000 in the previous year). Once adopted by the employer, eligible employees can set up their own individual SIMPLE IRA accounts to hold their salary reduction contributions, as well as contributions made by the employer on their behalf. A SIMPLE IRA is often used as a lower maintenance option to a 401(k) plan.
  • When am I eligible to participate in my employer’s SIMPLE IRA plan?
    You can participate as soon as you meet the eligibility requirements established by your employer at the time the SIMPLE IRA plan was adopted. You should receive an annual written reminder of your eligibility from your employer at least 60 days before the start of each year.
  • How much can I contribute to an SIMPLE IRA?
    The contribution limit for 2013 is $12,000. Account holders age 50 and over can contribute an additional $2,500.
  • Will my employer contribute to my SIMPLE IRA each year?
    If you contribute to your SIMPLE IRA, your employer must do so as well. The employer can choose to match up to 3% of compensation for participating employees or contribute 2% of compensation into all employee accounts.
  • May I contribute to a personal IRA as well as my SIMPLE IRA?
    Yes. For 2013, you can contribute up to $5,500 ($6,500 if you’re age 50 or older) to an IRA that’s separate from your SIMPLE IRA. However, depending on your income and tax filing status, your contribution may not be tax-deductible.
  • What types of contributions may be made to a SIMPLE IRA plan?
    Each eligible employee may make a salary reduction contribution and the employer must make either a matching contribution or a non-elective contribution. No other contributions may be made under a SIMPLE IRA plan.
  • Can I make a withdrawal from an SIMPLE IRA? If so, is there a penalty?
    The same rules and penalty exceptions apply as in a Traditional IRA except that the penalty is 25% if the money is withdrawn within the first 2 years from the date you began participating. State penalties may also apply. Also keep in mind that money withdrawn in the first 2 years cannot be rolled over to any retirement account or plan except another SIMPLE IRA.
  • Will I be required to take distributions from my SIMPLE IRA?
    Required Minimum Distributions (RMDs) must start by April 1 of the year following the year in which you reach age 70 1/2.
  • Why should I name a beneficiary?
    This allows you to control who receives the value of your retirement account should you die.
  • How many beneficiaries should I name?
    The number of beneficiaries you name, and whether you make them primary or contingent beneficiaries, is up to you.
  • What’s the difference between a primary and a contingent beneficiary?
    A primary beneficiary will inherit your IRA assets unless he/she pre-deceases you. A contingent beneficiary will inherit your IRA assets only if your primary beneficiary(ies) has died before your IRA assets have been distributed.
  • If I name multiple beneficiaries, how do I control how much each one gets? What happens if the totals don’t add up to 100%?
    You can allocate a percentage of the assets to each beneficiary. For example, if there were two primary beneficiaries, you could allocate 50% of your assets to each, or 75% to one and 25% to the other, or some other combination thereof. The same applies for contingent beneficiaries. It’s important, though, that the totals add up to 100%, so that all assets are accounted for. If the totals do not add up to 100%, your assets will be allocated evenly among the named beneficiaries.
  • What if I have multiple beneficiaries and one of them dies before I do?
    The percentage share of any remaining beneficiary(ies) will be increased on a pro-rata basis unless you complete a new Beneficiary Designation form, reallocating your assets.
  • Why should I choose a SIMPLE IRA for my business?
    There are many advantages to a SIMPLE IRA plan: - SIMPLE IRA plans are easy to set up and run—Aspire handles most of the details - Employees can contribute on a tax-deferred basis through convenient payroll deductions - You can choose to either match the employee contributions of those who decide to participate, or you can contribute a fixed percentage of all eligible employees’ pay - You may be eligible for a tax credit of up to $500 per year for each of the first 3 years for the cost of starting a SIMPLE IRA plan - Administrative costs are low - You are not required to file annual financial reports
  • What does it cost to establish a SIMPLE IRA plan at Aspire?
    Aspire does not charge a fee to establish a SIMPLE IRA plan.
  • How do I establish a SIMPLE IRA plan for my business?
    Complete the Plan Sponsor Profile, the IRS Form 5305-SIMPLE and the Aspire SIMPLE IRA Employer Agreement and return to Aspire. Once signed, the 5305-SIMPLE becomes the plan’s basic legal document, describing your employees’ rights and benefits. Please keep the original for your records.
  • When can I establish my SIMPLE IRA plan?
    Typically, SIMPLE IRA plans must be established between January 1st and October 1st.
  • Who is an eligible employee?
    An employee is eligible to participate if he or she received $5,000 or more in compensation from an employer in any previous 2 years, and you reasonably expect that you will pay them at least $5,000 in the current year.
  • Must I include all employees?
    No. If you wish, you can exclude employees who are covered by a collective bargaining agreement, employees acquired in a merger or similar business transaction, or nonresident aliens to whom you did not pay any U.S. income.
  • Are all of my eligible employees required to participate?
    No. Participation is voluntary, and you may offer a SIMPLE IRA plan regardless of how many employees actually participate.
  • When must I notify employees about the plan?
    You must let employees know that you have set up the plan no later than 60 days before the plan goes into effect. You must also tell them what type of contributions you intend to make. This 60-day period, known as the election period, provides employees the opportunity to make their salary reduction choice.
  • What is the deadline for setting up each employee’s SIMPLE IRA account?
    A SIMPLE IRA account must be set up for an employee before the first date by which a contribution is required to be deposited into the employee’s account.
  • Am I required to do any administration as the employer?
    There are two key disclosures that let employees know how the plan operates, inform them of changes in the plan’s structure and operation, and provide them with an opportunity to make decisions and take timely action with respect to their accounts. You can fulfill these disclosure requirements by providing the following to your employees: - Copy of Form 5305-SIMPLE, pages 1-2. This is the form used to establish your SIMPLE IRA plan. - Copy of a Summary Plan Description. A model form is included in this guide. Please note that these forms must be provided within a reasonable time prior to the plan’s 60-day election period.
  • As employer, do I have to file annual reports with the IRS?
    No, SIMPLE IRA plans are NOT required to file annual financial reports with the government (IRS Form 8881, Credit for Small Employer Pension Plan Startup Costs). In any two years of a five-consecutive-year period, you may use a dollar-for-dollar match of as little as 1% of compensation in place of 3% matching. If you decide to change the type or amount of contributions, you must notify employees at least 60 days before the start of the plan year. You can withdraw or use your traditional IRA assets at any time. However, these distributions are usually taxable, and a 10% excise tax generally applies if you withdraw or use IRA assets before you are age 59 1/2.
  • As an employer with a SIMPLE IRA plan, what are my choices for contributing to my employees’ SIMPLE IRA accounts?
    You can contribute in one of two ways: 1. Salary Match – you can choose to match up to 3% of the employee’s contribution; or 2. Non-elective contribution – you can choose to contribute 2% of each eligible employee’s compensation. (For 2013, only $255,000 of the employee’s compensation can be considered to figure the contribution limit.)
  • As a business owner, how do I calculate my own contributions if I’m self-employed?
    Use your net earned income to calculate your contributions for the year. Net earned income is the income you earn from personal services to or on behalf of your business, minus your deductions (excluding any contributions to your account). You may contribute up to the annual salary deferral contribution limit or 100% of your net earned income, whichever is less.
  • What are the current contribution limits for a participant in a SIMPLE IRA?
    Salary reduction contributions (employee-directed contributions or elective deferrals) under a SIMPLE plan are limited to $12,000 for 2013. Employees age 50 and over can contribute an additional $2,500.
  • What is the deadline for the remittance of employees’ SIMPLE IRA contributions?
    Contributions must be remitted no later than 30 days after the end of the month in which the money is withheld from the employees’ pay.
  • How do I remit SIMPLE IRA contributions?
    You can remit contributions by filling in and signing the Aspire Contribution Transmittal Form. Mail this form, along with the contribution check, to Aspire at the address listed on the form. Aspire also accepts Automated Clearing House (ACH) payments and wire transfers.
  • When are SIMPLE IRA contributions vested?
    All SIMPLE IRA contributions, both employer and employee, are immediately 100% vested.
  • Can participants take a withdrawal from their SIMPLE IRA account? If so, is there a penalty?
    The same rules and penalty exceptions apply as in a Traditional IRA, except that the penalty is 25% if the money is withdrawn within the first two years from the date you began participating. State penalties may also apply. Also keep in mind that money withdrawn in the first two years cannot be rolled over to any retirement account or plan except another SIMPLE IRA.
  • Will participants be required to take distributions from their SIMPLE IRA?
    Required Minimum Distributions (RMD) must start by April 1 of the year following the year in which a participant reaches age 70 1/2.

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