|Who is eligible||
Employers must have 100 or fewer employees and cannot maintain any other employer sponsored retirement plan. Employees must have earned at least $5,000 from the employer in any 2 preceding years and expected to earn at least $5,000 in the current year.
Earnings are tax-deferred and contributions are tax-deductible.
Employer contributions and employee salary deferrals. Employers can contribute the company contribution and the employee deferral online through Fidelity PlanManager.
NOTE: Due to the passing of the SECURE 2.0 Act take note that:
*Employers: Starting Jan 1, 2024, for companies with 25 or fewer employees, salary deferrals and catch up contributions are increased to 110% of the limits that would otherwise apply for that year. Employers with 26-100 employees may elect to apply the higher limits provided they agree to a matching contribution of 4% or a non-elective of 3%.
10% early withdrawal penalty (25% for first 2 years of plan participation) if under age 59½, subject to certain exceptions. Required minimum distributions starting at age 73.
A wide range of mutual funds, stocks, bonds, ETFs, and FDIC-insured CDs
Only certain fund families have mutual funds that are eligible investments for SIMPLE IRAs with no minimum initial investment requirement.
No account fees and no minimum to open an account.1 $0 commission for online US stocks and ETFs.*
Certain annual employee notifications must be made. No plan tax filings with the IRS are required. See the Maintaining your plan section for more information.
For current tax year: Set up and notify employees by October 1. Deferrals and matching must be contributed no later than 30 days after the end of the month in which amounts would have otherwise been payable to the employee.
Matching contributions are due no later than the due date for filing your business's income tax return including extension.
|How to make
Employers can contribute online through Fidelity PlanManager.
2. Open your plan
- Print, read, and retain copies of the following documents:
- In order to set up your plan, you will need to print, complete and sign the following documents:
- Please mail the completed originals in Step 2 to:
PO Box 770001
Cincinnati, OH 45277-0038
- Keep copies of all forms and documents for your company's plan records.
- Once we have received the completed required documents in Step 2, you are ready to enroll your employees. Please see Enroll Employees for more information.
3. Enroll employees
- If you intend to deliver plan-related materials to your employees via email, please consult the Department of Labor's guidance for the use of electronic delivery of required plan-related materials.
- Download, print, customize, and distribute to all eligible employees:
- Fidelity SIMPLE IRA Plan Summary Description (PDF)
- Fidelity SIMPLE IRA Plan Participant Notice (PDF)
You are required to provide eligible employees with the Sample Summary Description and Participant Notice on an annual basis (by November 2). Fidelity SIMPLE IRA Plans receive a Summary Description and Participant Notice when the plan is established and annually thereafter in September.
You are legally required to give all eligible employees at least 60 days to make or modify any salary reductions elections each year.
- Have every participating employee print and review the SIMPLE IRA Employee Enrollment Brochure (PDF)
- Have every participating employee open a SIMPLE IRA account. For anyone choosing to open his or her account with Fidelity, visit Fidelity.com/simpleiraapplication.
- Have every participating employee complete a Salary Reduction Agreement (PDF) and forward the completed agreement to your payroll vendor or payroll processor. The employer should keep a copy of the employee's elections on file for their records.
If you have any questions, call 800-544-5373 to speak with a Fidelity small business retirement plan associate.
4. Funding your plan
Once you have opened your SIMPLE IRA Plan and employee accounts have been established, the next step is to set up electronic funding for the plan. You have two options:
Option 1: Use Fidelity's Electronic Funding Service, which is available through our Plan Manager site:
- For more information on Fidelity Plan Manager, please visit the FAQs
Option 2: Use your external bank or payroll vendor to fund your plan electronically:
Print, review, and provide your bank or payroll vendor with a copy of the Important Information about Your Fidelity SIMPLE IRA Plan (PDF).
What are the eligibility requirements for opening a SIMPLE IRA plan? Which employers can establish a SIMPLE IRA plan?
Generally, SIMPLE IRA plans can be established by any business with 100 or fewer employees who earned $5,000 or more in the preceding year, and which does not currently maintain any other retirement plan.
- How do I open a SIMPLE IRA plan for my business? What about opening participant accounts?
When must my employees be notified of their eligibility to participate in the plan?
Eligibility varies based on the election you chose when you adopted the plan. Employees should be notified no later than as soon as they become eligible. In addition, you are required to provide eligible employees a Summary Description and Participant Notice on an annual basis (by November 2nd). 1. The Fidelity SIMPLE IRA authorized individual receives a Summary Description and Participant Notice when the plan is established and annually thereafter in September.
To open a SIMPLE IRA plan for the current year, the plan must be established and employees notified by October 1; please note that an exception applies for businesses established after October 1. See the Maintaining your plan section for more information.
How is the salary deferral process managed and who gets the paperwork?
Your employees complete the Salary Reduction Agreement Form and return it to you or your payroll office (it does not go to Fidelity). A sample salary reduction agreement form is available online and is included in the Fidelity SIMPLE IRA employee enrollment kit. You may use this form or create your own customized version.
What mutual funds are eligible for investment in a SIMPLE IRA?
You may buy or exchange any mutual funds available to IRAs at Fidelity in your SIMPLE IRA, as long as the minimum initial and subsequent investment limits are met. To be eligible for ongoing SIMPLE IRA contributions, however, a mutual fund must waive all loads, fees and investment minimums for SIMPLE IRA customers.
How do I get a copy of my Adoption Agreement, Summary Description, or a Plan Level Report?
For copies of your Plan Adoption Agreement or additional Summary Descriptions, please call a retirement representative at 800-544-5373 and say "Small business retirement plans" when prompted. The Summary Description is mailed to plans annually in September. Plan Level Reports are sent on a monthly basis to every SIMPLE IRA plan. The report includes a total of all salary deferral and employer contributions made for the period, is broken out by participants, and includes a participant level breakout of contributions.
My business is growing. Am I still eligible for a SIMPLE IRA plan?
Generally speaking, you are eligible for a SIMPLE IRA as long as your business has fewer than 100 employees earning $5,000 or more in the preceding year. As you grow, other retirement plans may become more appropriate. Please contact a Fidelity retirement representative at 800-544-5373 and say "Small business retirement plans" when prompted for more information.
- How can I make contributions to my SIMPLE IRA?
Maintaining your SIMPLE IRA plan
The Savings Incentive Match Plan for Employees (SIMPLE) IRA is suited for both self-employed individuals with no other employees and small business owners with 100 or fewer employees. It's a "simple" plan to operate, but you should be aware that there are some ongoing administrative responsibilities if your plan is active. The list below doesn't necessarily cover all of your responsibilities. You may want to consult the IRS or a qualified tax advisor if you have additional questions.
1. Establish your plan
a. Establish your plan and notify eligible employees by October 1 of the year you intend to begin your plan.
See: Open Your Plan
b. Complete the company profile form to provide us with information about your company.
- Choose the authorized individual(s) on the company profile form. It's a good idea to name the business owner as the primary authorized individual for the plan. because that's the person who will have the ability to add and remove authorized individuals.
- Set up your company bank for Plan Manager. Even if you don't intend to use Plan Manager, it 's a good idea to set up a company bank link in the event there's an issue with your outside funding mechanism.
2. Notify eligible employees
- Provide the Summary Description, Participant Notice, Salary Reduction Agreement and, for new participants, a SIMPLE Application (available online) to eligible employees. See: Enroll Employees
- Provide the notification for the first plan year and for every subsequent plan year. Employees must be given 60 days to make their elections.
- The annual 60-day election period allows employees to enter into or modify their salary reduction agreements. The election period starts when the employer satisfies the plan notification requirements.
- For the first plan year, the election period can be any 60-day period which includes the plan effective date.
- The election must start by the plan effective date.
- Employers may notify employees earlier, but the election period cannot end before the effective date.
- For subsequent plan years, the election period is the 60-day period immediately preceding January 1 of the calendar plan year. Employers must provide the notification by November 2 prior to the plan year.
3. Keep records
It's important to keep your original adoption agreement and any subsequent adoption agreements you fill out for the life of your plan, and possibly for years after termination. You should retain the Salary Reduction Agreements your employees return to you, and records of any contributions made to the plan on their behalf, as well as other documents related to your plan.
4. Contribute to participant accounts
- There are two options to fund the accounts in your SIMPLE IRA Plan: Plan Manger or by using an external bank or payroll vendor. See: Funding Your Plan
- Company contributions can be made up to your business tax filing dead line, plus extensions. Salary deferral contributions need to be made as soon as possible, but no later than 30 days after the end of the month in which they were deferred. See the IRS rules for more information.
5. Notify employees eligible to participate annually
- You must decide before November 2 of the current year whether or not you wish to continue the plan for the upcoming year, and if you want to make changes to what you offer.
- Be aware that if your plan does a matching contribution, you must match dollar for dollar up to 3% of compensation for at least three years out of a five year period.
- By November 2 you need to notify your employees if there will or will not be a plan for the upcoming year. If the plan is continuing the employees must also be informed of what the terms are by distributing a new Summary Description and Participant notice. These must be completed and distributed by November 2 to give your employees 60 days for their elections before January 1.
6. Abide by the terms defined in the plan agreement
7. Correct errors of operation
- Despite your best efforts, there may be errors of operation that arise in running your plan. Most errors occur around contributions. A good practice is to double check the following before submitting a contribution: Is it going to the right person? Is it marked for the correct year? Is it the right type of contribution (company vs. salary deferral)? Did you already process this contribution, and would this result in a duplicate? Some minor errors may be fixable within the plan. Please call a Retirement Representative to see if we can help 1-800-544-5373 (say "Small Business Retirement Plan" when prompted.) In some cases, the error may result in an excess contribution.
- Excess contributions: There is no formal IRS method to correct SIMPLE IRA excesses. You should consult your tax advisor for guidance if you determine you have an excess that must be removed, prior to completing the SIMPLE IRA RETURN OF EXCESS FORM. Additional information may also be found in the IRS SIMPLE IRA FIX-IT GUIDE.
NOTE: Fidelity cannot withdraw funds from a client's account without their permission. Both the plan's Authorized Individual and the account owner must sign off on a request for a return of excess.
8. Terminate your plan when appropriate
- If you are discontinuing your SIMPLE IRA Plan. you should notify your employees prior to November 2 of the current year that there will not be a plan effective the following January 1.
NOTE: You cannot terminate your plan in the middle of a calendar year. Once you have notified your employees of this benefit you must continue with the funding promised to your employees.
- Notify Fidelity in writing only after you have made all final contributions by sending a letter of instructions signed by the Authorized Individual to:
P.O. Box 770001
Cincinnati, Oh 45277 - 0037
- In the future, should you want to restart your plan you must notify eligible employees by November 2 of the year prior to the start of your plan on the following January 1. You cannot start a plan mid-year after your initial year.
1. Provide and maintain the Plan Agreement
NOTE: Fidelity does not use the IRS Model documents 5304 or 5305 - SIMPLE
2. Maintain accounts
Fidelity will provide individual brokerage SIMPLE IRA accounts on our platform for each eligible employee and the Fidelity SIMPLE IRA Customer Agreement and Important Disclosures that outlines the rules and agreement for the account, and will be provided to your employee upon account opening.
3. Prepare tax forms for employees
- IRS tax form 5498 each year there is activity in the account (including contributions).
- IRS tax form 1099-R for each year distributions or rollovers are processed out of an account.
4. Offer planning and investment guidance to your eligible employees who set up their SIMPLE IRAs at Fidelity
- They can choose investments using our exceptional online tools and data as well as through our experienced Representatives.
- For more information on how we can help you with investment management, planning and advice, please see What We Offer.
5. Provide and maintain a platform for Plan Administration
Our Plan Manager website is available to Authorized Individuals to contribute to your plan and perform plan maintenance.
Provide monthly plan statements for months that there are any contributions to the plan.
1. IRS Plan Checkup List
2. Retirement Plans for Small Business
3. Employee Plans Compliance Resolution System (EPCRS)
4. SIMPLE IRA FIX-IT GUIDE
5. IRS SIMPLE IRA PAGE
6. Remove Terminated Participant Form
7. Plan Maintenance Form
8. SIMPLE IRA RETURN OF EXCESS FORM
$0.00 commission applies to online U.S. equity trades and exchange-traded funds (ETFs) in a Fidelity retail account only for Fidelity Brokerage Services LLC retail clients. Sell orders are subject to an activity assessment fee (historically from $0.01 to $0.03 per $1,000 of principal). Other exclusions and conditions may apply. See Fidelity.com/commissions for details. Employee equity compensation transactions and accounts managed by advisors or intermediaries through Fidelity Institutional® are subject to different commission schedules.
1. No account fees or minimums to open Fidelity retail IRA accounts. Expenses charged by investments (e.g., funds, managed accounts, and certain HSAs) and commissions, interest charges and other expenses for transactions may still apply. See Fidelity.com/commissions for further details.
Fidelity does not provide legal or tax advice. The information herein is general in nature and should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific situation.
Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917