Any employee who earns $5,000 during any two preceding years and who is expected to earn $5,000 in the current year is eligible; certain employees can be excluded. The employer may also specify less restrictive eligibility requirements on the SIMPLE adoption agreement to expand the group of employees who are eligible.
For 2007 and 2008, $26,000 is the maximum annual allocation to a participant’s account ($10,500 deferral, plus $10,500 maximum match; $2,500 catch-up contribution and $2,500 matching contribution, if applicable). Limited to 3% of compensation.
All employer and participant contributions are immediately vested.
When an employer establishes a SIMPLE plan effective date, each eligible employee becomes eligible to make deferrals on that date. The employer then decides when the enrollment period begins and ends — it can be any 60-day period that includes the effective date or the day before the effective date. Employers must provide all eligible employees written notification of their eligibility and the employer’s contribution amount before the enrollment period begins.
All subsequent enrollment periods will begin on November 2 and end on December 31 for the next plan year.
Establishment - October 1 of the current calendar year.
Participant deferrals: The employer must deposit the elective deferrals into each participant’s SIMPLE IRA as of the earliest date on which those contributions can be reasonably segregated from the employer’s general assets, but in no case later than the close of the 30-day period following the last day of the month to which such elective deferrals relate. For example, if the deferrals are for October, the deposit must be made by November 30.
Employer contributions: The employer’s tax filing deadline (including extensions).