Simple IRA Plan

Oak Street Advisors can help your company establish a SIMPLE IRA retirement plan.  Just call
us at 843.946.9868 or toll free at 877.946.9868.  If you prefer just send us an email to
simple@oakadvisors.com.

For employers looking for a low cost way to offer a retirement plan, the SIMPLE IRA plan is a
good choice. SIMPLE IRA plans can be established by any business with 100 or less
employees who earned or are expected to earn $5,000 per year. Tax exempt organizations
and government entities also qualify to establish SIMPLE IRA plans. SIMPLE IRA plans are
maintained on a calendar year basis. You can establish a SIMPLE IRA plan anytime between
January 1 and October 1 of the initial plan year.  New plans or changes can only be made
effective January 1, if the plan was in existence for the previous calendar year

Under a SIMPLE IRA plan employees can make pretax contributions, and the employer makes
matching or non elective contributions. All contributions are made into an IRA established for
each participant. All contributions are immediately 100% vested. Investment decisions are
made by the individual participant, and the investment choices are limited only by IRA rules
and any limitations imposed by the custodian.

A SIMPLE IRA plan is established by adopting a SIMPLE IRA plan document provided by the
IRS or by adopting a prototype plan that has been approved by the IRS. Prototype plans are
offered by financial service firms like banks, brokerage, and insurance companies. Each
eligible employee must be provided with information about the plan (usually called a summary
plan description) and about the SIMPLE IRA where the participant’s funds will be deposited.

All participants may defer 100% of eligible compensation up to $11,500 for 2009 ($14,000 if
over 50). In addition to the employees deferral the employer is required to match dollar for
dollar up to 3% of the employee’s eligible compensation. Rather than making matching
contributions an employer can choose to make a non elective contribution of 2% of the
employee’s eligible earnings up to  $245,000 for 2009. However, if the non elective
contribution is chosen it must be made to all eligible employees regardless of whether they
chose to make any deferral contributions. The 3% match can be reduced if the following
conditions are met; a) the matching limit cannot be less than 1% b) the limit cannot be for
more than 2 years of a 5 year period, and c) the employees are notified in a reasonable
period of time before the 60 day election period when employees can select deferral rates.

Participation rates do not limit the amount highly compensated employees and business
owners can contribute to a SIMPLE IRA plan. An important distinction for business owners is
that, unlike a 401k plan, they may always make the maximum contribution to their own
account and receive the maximum allowable match.

During the 60 day election period which generally begins November 2 of each calendar year,
the employer must provide each eligible employee details of their opportunity to make or
change a salary deferral, the employer’s decision as to the matching contributions or non
elective contributions, and a summary description of the plan.

Early withdrawals from SIMPLE IRA plans are allowed and may not be restricted by the
employer. However the IRS levies a 25% tax penalty for early (pre 591/2) withdrawals made in
the first two years of plan participation. After 2 years early withdrawals are subject to a 10%
penalty. Of course income taxes are due on any withdrawals. During the initial 2 year period
SIMPLE IRA plan funds cannot be transferred or rolled over without taxes to any account
other than another SIMPLE IRA.


Oak Street Advisors can help your company establish a SIMPLE IRA retirement plan.  Just call
us at 843.946.9868 or toll free at 877.946.9868.  If you prefer just send us an email to
simple@oakadvisors.com.  

Oak Street Advisors
1335 44th Ave N  Suite 201
Myrtle Beach, SC  29577



For employers looking for
a low cost way to offer a
retirement plan, the
SIMPLE IRA plan is a good
choice
.