Saving for the Future with a SIMPLE IRA

Building retirement savings can be easier than you think when you choose the Savings Incentive Match Plan for Employees (SIMPLE IRA). Small businesses with fewer than 100 eligible employees can offer the SIMPLE IRA to help workers increase their retirement funds. An individual’s age determines how much of earnings can be contributed annually.

How SIMPLEs Work

  • Unlike the SEP IRA, employers participating in the SIMPLE IRA are required to match plan participants’ contributions of one to three percent, or contribute two percent to all eligible employees, regardless if they are participating in the plan.
  • Catch-up contributions can be made by employees age 50 and older.

Why a SIMPLE IRA is Beneficial

For Employers:

  • Simple to maintain, with limited recordkeeping
  • Low cost
  • Ability to set aside money for your own retirement and that of your employees
  • Employer contributions are tax-deductible

For Employees:

  • Employees own the annuity or account
  • Contributions to the SIMPLE IRA are invested on a pre-tax basis with immediate 100-percent vesting
  • Employee contributions are tax-deductible
  • Earnings are tax-deferred until withdrawal1 (usually at retirement)
  • Employees have the option of contributing to an additional IRA

To learn more about SIMPLE IRAs, contact your local Woodmen of the World Representative.

1. Distributions prior to age 59-1/2 may result in a 10 percent premature distribution penalty imposed by the IRS. Distributions during the first two years may be imposed a 25 percent penalty.
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