Fix It Guide - SIMPLE IRA Plan Sponsor Requirements

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It's your responsibility as an employer with a SIMPLE IRA plan to make sure that you allow all eligible employees to participate, according to the SIMPLE IRA plan's eligibility requirements. Failure to allow eligible employees to participate is a common mistake. Under the general participation rule for SIMPLE IRA plans, employees who you reasonably expect to receive at least $5,000 in compensation during a calendar year and who did so in any prior two years are eligible to participate in a SIMPLE IRA plan. A helpful tip to check for mistakes is to review your SIMPLE IRA plan document to determine who you must allow to participate. Compare past payroll information with employees who participated in the SIMPLE IRA plan. To avoid mistakes, before adopting this type of plan, you should understand the features of a SIMPLE IRA plan and determine whether this type of plan is right for you. In the case of a SIMPLE IRA plan, you have limited flexibility to customize the criteria for employee participation in the plan. The plan's administrators should be familiar with the terms of the plan document. And there should be sufficient plan procedures in place to ensure that you allow the eligible employees to participate in the plan.