SIMPLE Plans Flashcards
What are the employer eligibility requirements for establishing and maintaining a SIMPLE IRA plan?
a. Must be maintained on a calendar-year basis
b. An employer cannot maintain another qualified retirement plan under which the employee is currently accruing benefits
c. An employer cannot have more than 100 employees who earned $5,000 or more in compensation in the preceding calendar year
d. All of the above
d. All of the above
What is the employer SIMPLE IRA plan establishment deadline provided that the employer did not previously maintain a SIMPLE IRA plan?
Any date between January 1 and October 1 of any year
What are the employee eligibility requirements for participation in a SIMPLE IRA plan?
An employee has to earn $5,000 in any two of the preceding calendar years to be eligible to participate.
What document must an employer use to include nonresident aliens with no U.S. earned income in a SIMPLE IRA plan?
Prototype
Which document should be used if the employer wants to allow employees to open a SIMPLE IRA at the financial organization of their choice?
Form 5304 SIMPLE
Which document should be used if the employer wants to use a designated financial institution (DFI)?
Form 5305-SIMPLE
Which document allows a financial organization to act as a DFI in some cases and a nonDFI in others?
Prototype
What is the maximum amount an employee who is under age 50 at the close of the plan year can defer into a SIMPLE IRA plan for 2024?
$16,000
What is the 2024 catch-up contribution limit for a SIMPLE IRA plan?
$3,500
When may an employee begin making catch-up contributions?
The year she turns 50
What contribution options are available to employers offering SIMPLE IRA plans? Indicate all correct responses.
a. Match employee deferrals dollar-for-dollar up to three percent of the employee’s compensation
b. Make a two percent nonelective contribution to all eligible employees
c. Make a three percent nonelective contribution to all eligible employees
d. Elect to match a lower percentage (but not lower than one percent) for two years out of any five–year period
a. Match employee deferrals dollar-for-dollar up to three percent of the employee’s compensation
b. Make a two percent nonelective contribution to all eligible employees
d. Elect to match a lower percentage (but not lower than one percent) for two years out of any five–year period
What is the time limit for employers to forward employee deferrals to the employee’s SIMPLE IRA? Indicate all correct responses.
a. No later than 30 days after the end of the month to which the deferrals relate
b. No later than 60 days after the end of the month to which the deferrals relate
c. No later than seven days after the deferrals are withheld by the employer (required for small plans)
d. No later than seven days after the deferrals are withheld by the employer (may be used for small plans but not required)
a. No later than 30 days after the end of the month to which the deferrals relate
d. No later than seven days after the deferrals are withheld by the employer (may be used for small plans but not required)
When can distributions be taken from a SIMPLE IRA?
At any time
What penalties may apply to SIMPLE IRA distributions? Indicate all correct responses.
a. Possible 25 percent early distribution penalty tax when the SIMPLE IRA owner is under age 59½ and less than two years have passed since the first contribution was made
b. Possible 25 percent early distribution penalty tax when the SIMPLE IRA owner is under age 59½
c. Possible 10 percent early distribution penalty tax when the SIMPLE IRA owner is under age 59½ and less than two years have passed since the first contribution was made
d. Possible 10 percent early distribution penalty tax when the SIMPLE IRA owner is under age 59½ and at least two years have passed since the first contribution was made
a. Possible 25 percent early distribution penalty tax when the SIMPLE IRA owner is under age 59½ and less than two years have passed since the first contribution was made
d. Possible 10 percent early distribution penalty tax when the SIMPLE IRA owner is under age 59½ and at least two years have passed since the first contribution was made
When can assets in a SIMPLE IRA be rolled over or transferred to another SIMPLE IRA?
Once two years have passed from the date of the first contribution
