SIMPLE IRA Plan Fix-it Guide
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Mistake |
Find the Mistake |
Fix the Mistake |
Avoid the Mistake |
1) You have not updated your SIMPLE IRA plan document for current law changes. (More) (Video) |
Determine if your plan document is the latest IRS-approved plan from your financial institution or a current model plan. |
Adopt the latest version of your financial institution’s IRS-approved SIMPLE IRA plan or a current Form 5304-SIMPLE or 5305-SIMPLE. |
Make sure your SIMPLE IRA plan document is the most current available. |
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Review prior year’s compensation data to determine if you had more than 100 employees who earned $5,000 or more in compensation. |
Stop employer and employee contributions to the SIMPLE IRAs. |
Prior to establishing a SIMPLE IRA plan, ensure that you meet the requirements. |
3) Your business sponsors another qualified retirement plan. (More) |
Determine if any employee received an allocation of contributions or accrued a benefit from your other qualified plan. |
Stop employer and employee contributions to the SIMPLE IRAs. |
Do not maintain another qualified retirement plan while sponsoring a SIMPLE IRA plan. |
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Review plan document sections on eligibility and participation. Check whether employees were enrolled at the proper time. |
Make corrective contributions to place affected employees in the position they would have been in but for the mistake. |
Review the participation status of all employees at least annually. |
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Review the plan document to determine if you are using the proper compensation for deferrals and contributions. |
Make corrective contributions to the plan to make up for the employees’ missed deferrals and contributions. |
Review the plan’s terms to ensure that you are using the correct amount of compensation to calculate deferrals and contributions. |
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Compare the dates on which you withheld the elective deferral contributions and the dates on which you contributed the deferrals to employees’ SIMPLE IRA accounts. Review employee data, payroll remittances and other records to determine if you deposited employer contributions timely. |
Make corrective contributions for each employee equal to the missed earnings for the period the deposits were late. |
Establish procedures to ensure that employees’ elective deferral contributions and employer contributions are timely deposited. |
7) Eligible employees who terminated during the year were not given employer contributions. (More) |
Review employee payroll data to determine if eligible employees terminated during the year. |
Make corrective contributions to place affected employees in the position they would have been in but for the mistake. |
Establish administrative procedures to ensure that you make an employer contribution for all eligible employees whether or not they terminated employment during the year. |
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Determine if the required SIMPLE IRA plan notifications were timely provided to eligible employees. |
Evaluate the impact of the failure to provide the required notices and make a reasonable correction. |
Establish procedures to ensure that required notices are timely provided to employees. |
SIMPLE IRA Plan Overview
EPCRS Overview
SIMPLE IRA Plan Fix-It Guide (pdf)
SIMPLE IRA Plan Checklist
IRA-Based Plans Additional Resources
IRS.gov / Retirement Plans / Correcting Plan Errors / Fix-It Guides / SIMPLE IRA Plan Fix-It Guide
