SIMPLE IRA PLAN CHECKLIST
This Checklist is not a complete description of all For Business Owner’s Use
plan requirements, and should not be used as a ( D O N OT S E N D T H I S W O R K S H E E T TO T H E I R S )
substitute for a complete plan review.
Every year it is important that you review the requirements for operating your Savings Incentive Match Plan for
Employees of Small Employers (SIMPLE) IRA plan. This Checklist is a “quick tool” to help you keep your plan in
compliance with many of the important tax rules. Underlined text below will link you to Internet information.
1. Does your business have 100 Yes No 6. Do you give your employees an annual Yes No
or fewer employees? ■ ■ notice, before November 2 of each year, ■ ■
Businesses with more than 100 employees (including full-time,
of plan provisions and employer con-
tribution levels for the upcoming year?
part-time, and seasonal employees) with individual earnings of
at least $5,000 yearly cannot establish a SIMPLE IRA plan. You must give your employees notice of the plan provisions
and employer contribution levels, including any plan changes,
at least 60 days prior to the start of the next calendar year.
2. Is this SIMPLE IRA plan your Yes No
business's only retirement plan? ■ ■
A business with a SIMPLE IRA plan generally cannot also
7. Have you allowed employees to ter- Yes No
sponsor any other retirement plan, such as a 401(k) plan.
minate their salary reduction election? ■ ■
You must allow your employees, at any time, to stop
making deferrals.
3. Do you know how to, and did Yes No
you, identify your eligible employees? ■ ■
8. Have you deposited employee Yes No
An eligible employee is one with compensation of at least
$5,000 per year in any 2 prior years, who is expected to
deferrals timely? ■ ■
earn at least $5,000 this year. You must deposit an employee’s deferral in the IRA as soon
as possible, but no later than 30 days following the month in
which the employee would have otherwise received the money.
4. Is the business that the SIMPLE IRA Yes No
plan covers the only business that you ■ ■
and/or your family members own? 9. Have you deposited employer Yes No
Employees of other businesses you and/or your family
contributions timely? ■ ■
members own may have to be considered when determining As an employer, you have until the due date, including
who is an eligible employee under this SIMPLE IRA plan. extensions, of your tax return to deposit matching con-
tributions or nonelective contributions.
5. Did you notify your eligible employees Yes No
of their right to elect salary reduction or ■ ■ 10. Are employee deferrals to SIMPLE Yes No
modify a prior salary reduction agreement? IRAs limited as required by law? ■ ■
Each year, you must give your employees notice before The deferral limit to a SIMPLE IRA is $8,000 for 2003, $9,000
November 2 of their right to participate in the retirement for 2004, and $10,000 for 2005. Catch-up contributions of
plan for the next year and to change a prior salary participants, aged 50 or over, are limited to an additional
reduction agreement. $1,000 for 2003, $1,500 for 2004, and $2,000 for 2005.
If you answered “No” to any of the above questions, you may have a mistake in the operation of
your SIMPLE IRA plan. Many mistakes can be corrected easily, without penalty and without notifying the IRS.
■ contact your benefits professional ■ visit the IRS at www.irs.gov/ep ■ call the IRS at (877) 829-5500
Department of the Treasury Publication 4284 (5-2004)
Internal Revenue Service Catalog Number 37994X
www.irs.gov
