SIMPLE IRA

Fidelity’s Savings Investment Match Plan for Employees (SIMPLE IRA) makes it easier for self-employed individuals and small businesses with 100 or fewer employees to offer tax-advantaged retirement plans.

Plan features

Tax advantages

Employers:

  • Employer contributions are deductible as business expenses.

Participants:

  • Tax-deferred growth potential
  • Pretax contributions for participants
Eligibility

Employers:

  • Must have 100 or fewer employees who earned at least $5,000 in the preceding year
  • Cannot maintain any other employer-sponsored retirement plan

Participants:

  • Must have earned at least $5,000 from the employer in any two preceding years
  • Must be expected to earn at least $5,000 in the current year1
Contributions

Funded by employer contributions and elective employee salary deferrals

Plan Sponsors:

  • Mandatory 3% matching contribution or 2% non-elective contribution

Participants:

  • Up to 100% of compensation, with a maximum of $12,500 for 2016 and 2017 ($15,500 if age 50 or older)
Establishment deadline

For current tax year: Set up and notify employees by October 1.2

Administrative responsibilities

Certain annual employee notifications must be made.

No plan tax filings with the IRS are required.

Withdrawals

Required minimum distributions starting at age 70½

10% early withdrawal penalty (25% for first two years of plan participation) if under age 59½, subject to certain exceptions

Investment options

Include 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.

Support and guidance

Research and tools to help you create a long-term plan and choose investments

Fees

$350 per plan3 collected annually from the employer; or $25 per participant3 collected annually from participants' accounts

Next steps

Open a SIMPLE IRA.
Call 800-544-5373 and select option 3 to speak with a small-business retirement specialist.

Get started on your own. Get a jump on the paperwork for your new plan.
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