A Savings Incentive Match Plan for Employees IRA (SIMPLE IRA) is an employer-sponsored retirement plan, similar to a 401(k), in which employees and employers can both contribute to the employee's plan. SIMPLE IRAs are available to employers with up to 100 employees. Employers who offer SIMPLE IRAs are required by the 澳洲幸运5开奖号码历史查询:Internal Revenue Service (IRS) to report certain information on the 澳洲幸运5开奖号码历史查询:W-2 forms of participating employees.

How SIMPLE IRAs Work

SIMPLE IRAs are 澳洲幸运5开奖号码历史查询:designed for small businesses as a way to offer a retirement savings plan for employee꧙s. To offer a SIMPLE IRA to an employee🍬, a business cannot have any other retirement plan.

For employees who opt to contribute, their contributions are made 澳洲幸运5开奖号码历史查询:via salary deferral. The annual contribution limit for a SIMPLE retirement account is $15,500 for 2023 and $16,000 for 2024. Participants aged 50 or older may contribute up to $3,500 in 澳洲幸运5开奖号码历史查询:catch-up contributions per year.

Employers are required to contribute annually and may choose between making 澳洲幸运5开奖号码历史查询:matching contributions based on employee contributions, called elective contributions, or through 澳洲幸运5开奖号码历史查询:nonelective contributions. Employers have two options. They can:

• Match up to 3% of a participant employee's annual salary and contribute each year to the plan, or
• Make nonelective contributions equal to 2% of each eligible employee's pay—up to $330,000 for 2023 ($345,000 for 2024)—regardless of whether the employee makes elective deferrals.

Employees are fully vested in their SIMPLE IRA from its inception. However, in-service withdrawals are included in income and subject to ordinary taxation. Also, participants may be subject to an IRS early withdrawal penalty of 10% if under the age of 59½. If withdrawals are taken within the first two years of issue, the penalty is 25%.

Simple IRA W-2 Reporting Requirements

As the Sav⛎ings Incentive Match Plan for Employees IRA works similarly to other employer-sponsored retirement plans, such as a 澳洲幸运5开奖号码历史查询:401(k) plan, salary deferral contributions m📖ust be reported on each participant employee's W-2.

On Form W-2 for employee compensation, SIMPLE IRA contributions made by the employee are deducted from the "wages, tips, and other compensation" box, and box 13 "retirement plan" is selected.

The dollar amounts of the total annual contributions are not specifically listed but are calculated and reported by the taxpayer. SIMPLE IRA contributions are not subject to federal income tax withholding. However, the salary reduction contributions are subject to 澳洲幸运5开奖号码历史查询:Social Security, Medicare, and 澳洲幸运5开奖号码历史查询:federal unemployment (FUTA) taxes, but nonelective and matching contributions are not subject to these taxes. Contribution amounts are added back into earnings for these boxes, which are numbers 3 and 5, respectively, on Form W-2. An employee's total contribution must also be included in box 12 with code D or S.

SIMPLE IRA contributions by employee participants should not be reported on 澳洲幸运5开奖号码历史查询:Form 1040, Schedule 1, Line 16. However, employees who have additional income from consulting or freelancing can make additional SIMPLE IRA contributions from that income, up to the amount of that earned income and up to the combined total annual SIMPLE IRA contribution limit for the year. It is those contributions that the employee needs to report on Schedule 1, Line 16.

Meanwhile, the employer receives a 澳洲幸运5开奖号码历史查询:deduction for any matching contributions made to the participant 澳洲幸运5开奖号码历史查询:on Schedule C of the company's business 澳洲幸运5开奖号码历史查询:tax return. Since the contributions are deductible for the employer, the company's matching dollars are not reported on the W-2 form for the employee.

Correction–Jan 6, 2025: This article has been corrected to reflect how to report SIMPLE IRA contributions on Schedule 1, line 16.