41.9 SIMPLE IRA Plans

If you do not maintain any other retirement plan and have 100 or fewer employees, you may set up a salary-reduction type of plan for yourself and your employees. The SIMPLE IRA contribution rules are discussed at 8.17. A SIMPLE plan may also be made as part of a 401(k) plan (7.17).

Under a SIMPLE IRA for 2012, you may contribute to your own account $11,500 of net earnings plus an additional $2,500 if age 50 or over by the end of the year. You may also make a “matching” contribution of up to 3% of your net earnings.

If you have employees, they generally could make elective salary-reduction contributions for 2012 up to $11,500 (plus $2,500 if age 50 or over). You must make a 3% matching contribution unless you choose to make a 2% non-elective contribution.

See Chapter 8 for further details on SIMPLE IRAs (8.17 − 8.18).