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Who needs 5305-SIMPLE Form: What You Should Know

I wish to file a joint retirement plan with my spouse and have a personal loan secured upon my death.  What you should know about: SIMPLE IRA (Rev. March 2016) You must file a Form 5304 if you have a joint retirement plan with a spouse, and you are also using a personal loan secured upon your death. If either one of your spouses is also an eligible retirement plan beneficiary, only one of them can be an eligible retirement plan beneficiary in your plan. If one or both of the spouses are not eligible, the plan must be filed separately since the assets are being protected by one person. If I am a student, my spouse is under the age of 18, and my eligible retirement benefits would be reduced if I withdraw my savings. What  you should know about: SIMPLE IRA (Rev. March 2016) If the assets will be used as a support for a student, do not use SIMPLE IRA Form 5304 if you are applying as part of a pension plan. In this case, you can complete Form 5305, and attach it to your Social Security or retirement check as a supporting document. Form 8865 and Form 8866 must be filed separately as a support document for the student if filing jointly.  What is the IRS penalty for improperly using a SIMPLE IRA? The penalty is 2,000 for the first violation, 5,000 for each subsequent violation, and 10,000 for failure to make required annual tax-filing requirements in the first two years of the plan. There will also be a civil penalty of 100 for each day of failure to properly report your SIMPLE IRA assets and annual required filing (IRS Form 8949), whether the plan is a qualified retirement plan, SIMPLE IRA plan, or an independent plan. Do not let the penalty intimidate you. For more information, review IRS Notice 2015-60, Notice 2016-20 to Individuals Filing a SIMPLE IRA Plan and Notice 2016-37, Notice 2016-40, and the SIMPLE IRA Guide to the IRS for more information. What if I already started a retirement plan with the same plan name that I am going to file this new plan with? If so, you may be able to use the same plan name for both SIMPLE and ROTH IRA plans. However, each SIMPLE IRA plan must include a separate account code.

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FAQ - Who needs Form 5305-SIMPLE

Do employers have to contribute to simple 401k?
Under a SIMPLE 401(k) plan, an employee can elect to defer some compensation. But unlike a regular 401(k) plan, you the employer must make either. A matching contribution up to 3% of each employee's pay, or. A non-elective contribution of 2% of each eligible employee's pay.
When must employer make SIMPLE IRA contributions?
For most people, this means employer contributions for a year must be made by April 15 of the following year, or by October 15 if on extension.
When can I participate in a SIMPLE IRA?
You can set up a SIMPLE IRA plan effective on any date from January 1 through October 1 of a year, provided you did not previously maintain a SIMPLE IRA plan.
When must SIMPLE IRA contributions be made?
When must I deposit the contributions I make for myself to my SIMPLE IRA? You must deposit your salary reduction contributions within 30 days after the end of the tax year. For most people, this means salary reduction contributions for a year must be made by January 30 of the following year.
Who is eligible for SIMPLE IRA?
Who can establish a SIMPLE IRA plan? Any employer (including self-employed individuals, tax-exempt organizations and governmental entities) that had no more than 100 employees with $5,000 or more in compensation during the preceding calendar year (the "100-employee limitation") can establish a SIMPLE IRA plan.
What taxes is a SIMPLE IRA exempt from?
SIMPLE IRA contributions are not subject to federal income tax withholding. However, salary reduction contributions are subject to social security, Medicare, and federal unemployment (FUTA) taxes. Matching and nonelective contributions are not subject to these taxes.
Are simple contributions mandatory?
SIMPLE IRA contribution limits for 2023 and 2023 Employer contributions are mandatory and can be made using one of two methods. Provide matching contributions up to 3% of the employee's pay, not limited by any annual compensation limit.
Can I stop contributing to my SIMPLE IRA?
To terminate a SIMPLE IRA plan, notify the financial institution that you will not make a contribution for the next calendar year and that you want to terminate the contract or agreement. You must also notify your employees that the SIMPLE IRA plan will be discontinued.
Is a Simple IRA taxable?
Withdrawals from SIMPLE IRAs Generally, you have to pay income tax on any amount you withdraw from your SIMPLE IRA. You may also have to pay an additional tax of 10% or 25% on the amount you withdraw unless you are at least age 59½ or you qualify for another exception.
Is a Simple IRA the same as a traditional IRA for tax purposes?
Contributions are made to an Individual Retirement Account or Annuity (IRA) set up for each employee (a SIMPLE IRA). A SIMPLE IRA plan account is an IRA and follows the same investment, distribution and rollover rules as traditional IRAs.
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