SIMPLE IRA
Business & Finance abbreviation · Personal Finance
| Stands for | Savings Incentive Match Plan for Employees individual retirement account |
|---|---|
| Categories | Business & Finance |
SIMPLE IRA stands for Savings Incentive Match Plan for Employees individual retirement account, a personal finance abbreviation.
Retirement plan for businesses with 100 or fewer employees in which workers make salary deferrals and the employer must either match up to 3% of pay or contribute 2% of pay for every eligible employee. Contribution limits are lower than a 401(k)'s, but administration is far simpler.
Example: Our dental practice moved from a SIMPLE IRA to a 401(k) once we wanted higher deferral limits.
Usage notes
Introduced by the Small Business Job Protection Act of 1996; "SIMPLE" is written in capitals because it is itself an acronym. Withdrawals in the first two years of participation face a 25% additional tax instead of the usual 10%. An employer with a SIMPLE IRA generally cannot maintain any other retirement plan in the same year.
Related abbreviations
More personal finance abbreviations
- Roth 401(k) – Roth designated account within a 401(k) plan
- Roth IRA – Roth individual retirement account
- RRIF – Registered Retirement Income Fund
- RRSP – Registered Retirement Savings Plan
- SEP IRA – Simplified Employee Pension individual retirement account
- SEPP – Substantially equal periodic payments
- SIPP – Self-invested personal pension
- SMSF – Self-managed super fund
- Solo 401(k) – One-participant 401(k) plan
- SWR – Safe withdrawal rate
- TFSA – Tax-Free Savings Account
- TOD – Transfer on death