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SIMPLE IRA


What is SIMPLE IRA? It is a retirement savings plan specially designed as a start-up plan for small employers who do not currently sponsor retirement benefits. "SIMPLE" stands for "Savings Incentive Match Plan for Employees".  Can I set up such a plan? To be able to set up SIMPLE IRA plan you must have 100 employees or less and not offer any other retirement savings plan. SIMPLE IRA carries no filing requirement with the IRS on the employer and cost very little to set up and maintain.
 
 
How much can I contribute into SIMPLE IRA plan? Employees can contribute $11,500 in 2010. If the employee is 50 years or older, they can make additional “catch-up” contributions of $2,500 for a total of $14,000. The employer has the option of matching the employees’ contribution up to 3% of their wages or contribute regular, non-elective 2% for each eligible employee's wages (e.g. meaning the employee does not put any money into the plan while the employer contributes 2% of the employee wages). 

 
Where do I report SIMPLE IRA tax deduction? The SIMPLE IRA tax deduction is really an adjustment to the income and not part of the Standard or Itemized deductions. It is reported on form 1040 line 28.
 
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