A SIMPLE (Savings Incentive Match Plan for Employees) Self Directed IRA is a type of traditional IRA for small businesses and self-employed individuals. Self Directed IRAs may make a wide range of investments. Unlike a Traditional IRA where only the individual makes the contributions, a SIMPLE IRA requires both the individual and the business to make the contribution. The maximum contribution for 2018 is $12,500 or $15,500 depending on age. Employers can match up to 3% of employee’s compensation per year.
Employers with fewer than 100 employees and no other current retirement plan can establish an individual retirement accounts for each participating employee. A SIMPLE IRA offers simpler and less costly administration rules than the traditional 401k. SIMPLE IRAs have requirements similar to Traditional IRAs but participants enjoy higher individual contribution limits and the employer is required to make contributions to the plan.
- Contributions are tax-deferred, meaning that they are not subject to federal income tax until the time of distribution.
- If you anticipate being in a lower tax bracket when you retire, this type of retirement account may have significant tax benefits.
- Proceeds from the SIMPLE Self Directed IRA investment go directly to the IRA with no Federal Income Tax or Federal Tax filing
- Employer contributions are deductible as a business expense.
- Individuals can contribute up to the annual limit
- Limit for 2018 is $12,500 for individuals under the age of 50
- Limit for 2018 is $15,000 for individuals over the age of 50
- Distributions are penalty free after age 59 ½ and must begin by age 70 ½ (Required Minimum Distribution)
- Distributions are subject to federal income tax