Form 5305-Simple - Savings Incentive Match Plan For Employees Of Small Employers (Simple) - For Use With A Designated Financial Institution Page 5

Download a blank fillable Form 5305-Simple - Savings Incentive Match Plan For Employees Of Small Employers (Simple) - For Use With A Designated Financial Institution in PDF format just by clicking the "DOWNLOAD PDF" button.

Open the file in any PDF-viewing software. Adobe Reader or any alternative for Windows or MacOS are required to access and complete fillable content.

Complete Form 5305-Simple - Savings Incentive Match Plan For Employees Of Small Employers (Simple) - For Use With A Designated Financial Institution with your personal data - all interactive fields are highlighted in places where you should type, access drop-down lists or select multiple-choice options.

Some fillable PDF-files have the option of saving the completed form that contains your own data for later use or sending it out straight away.

Form 5305-SIMPLE (Rev. 3-2012)

Page

Additional Information

Matching Contributions

applicable amount for any calendar year.

The applicable amount is $11,500 for

In general, you must contribute a

2012. After 2012, the $11,500 amount

Timing of Salary Reduction

matching contribution to each eligible

may be increased for cost-of-living

Contributions

employee’s SIMPLE IRA equal to the

adjustments. In the case of an eligible

employee’s salary reduction

employee who is 50 or older by the end

The employer must make the salary

contributions. This matching contribution

of the calendar year, the above limitation

reduction contributions to the

cannot exceed 3% of the employee’s

is increased by $2,500 for 2012. After

designated financial institution for the

compensation. See Definition of

2012, the $2,500 amount may be

SIMPLE IRAs of all eligible employees

Compensation later.

increased for cost-of-living adjustments.

no later than the 30th day of the month

You may reduce this 3% limit to a

following the month in which the

Timing of Salary Reduction

lower percentage, but not lower than

amounts would otherwise have been

Elections

1%. You cannot lower the 3% limit for

payable to the employee in cash.

more than 2 calendar years out of the

For a calendar year, an eligible employee

The Department of Labor has

5-year period ending with the calendar

may make or modify a salary reduction

indicated that most SIMPLE IRA plans

year the reduction is effective.

election during the 60-day period

are also subject to Title I of the

immediately preceding January 1 of that

Note. If any year in the 5-year period

Employee Retirement Income Security

year. However, for the year in which the

described above is a year before you

Act of 1974 (ERISA). Under Department

employee becomes eligible to make

first established any SIMPLE IRA plan,

of Labor regulations, at 29 CFR

salary reduction contributions, the period

you will be treated as making a 3%

2510.3-102, salary reduction

during which the employee may make or

matching contribution for that year for

contributions must be made to the

modify the election is a 60-day period

purposes of determining when you may

SIMPLE IRA at the designated financial

that includes either the date the

reduce the employer matching

institution as of the earliest date on

employee becomes eligible or the day

contribution.

which those contributions can

before.

reasonably be segregated from the

To elect this option, you must notify

employer’s general assets, but in no

You can extend the 60-day election

the employees of the reduced limit within

event later than the 30-day deadline

periods to provide additional

a reasonable period of time before the

described previously.

opportunities for eligible employees to

applicable 60-day election periods for

make or modify salary reduction

the year. See Timing of Salary Reduction

Definition of Compensation

elections using the blank in Article II,

Elections earlier.

item 2b. For example, you can provide

“Compensation” means the amount

Nonelective Contributions

that eligible employees may make new

described in section 6051(a)(3) (wages,

salary reduction elections or modify prior

Instead of making a matching

tips, and other compensation from the

elections for any calendar quarter during

contribution, you may, for any year,

employer subject to federal income tax

the 30 days before that quarter.

make a nonelective contribution equal to

withholding under section 3401(a)), and

2% of compensation for each eligible

amounts paid for domestic service in a

You may use the Model Salary

employee who has at least $5,000 in

private home, local college club, or local

Reduction Agreement on page 3 to

compensation for the year. Nonelective

chapter of a college fraternity or sorority.

enable eligible employees to make or

contributions may not be based on more

Usually, this is the amount shown in box

modify salary reduction elections.

than $250,000* of compensation.

1 of Form W-2, Wage and Tax

Employees must be permitted to

Statement. For further information, see

To elect to make nonelective

terminate their salary reduction elections

Pub. 15, Circular E, Employer’s Tax

contributions, you must notify employees

at any time. They may resume salary

Guide. Compensation also includes the

within a reasonable period of time before

reduction contributions for the year if

salary reduction contributions made

the applicable 60-day election periods

permitted under Article II, item 2b.

under this plan, and, if applicable,

for such year. See Timing of Salary

However, by checking the box in Article

compensation deferred under a section

Reduction Elections earlier.

II, item 2d, you may prohibit an

457 plan. In determining an employee’s

employee who terminates a salary

Note. Insert “$5,000” in Article III, item

compensation for prior years, the

reduction election outside the normal

2b(i) to impose the $5,000 compensation

employee’s elective deferrals under a

election cycle from resuming salary

requirement. You may expand the group

section 401(k) plan, a SARSEP, or a

reduction contributions during the

of employees who are eligible for

section 403(b) annuity contract are also

remainder of the calendar year.

nonelective contributions by inserting a

included in the employee’s

compensation amount lower than

compensation.

Contributions (Article III)

$5,000.

For self-employed individuals,

Only contributions described below may

Effective Date (Article VII)

compensation means the net earnings

be made to this SIMPLE IRA plan. No

from self-employment determined under

additional contributions may be made.

Insert in Article VII the date you want the

section 1402(a), without regard to

provisions of the SIMPLE IRA plan to

Salary Reduction Contributions

section 1402(c)(6), prior to subtracting

become effective. You must insert

any contributions made pursuant to this

As indicated in Article III, item 1, salary

January 1 of the applicable year unless

SIMPLE IRA plan on behalf of the

reduction contributions consist of the

this is the first year for which you are

individual.

amount by which the employee agrees

adopting any SIMPLE IRA plan. If this is

to reduce his or her compensation. You

the first year for which you are adopting

must contribute the salary reduction

a SIMPLE IRA plan, you may insert any

contributions to the designated financial

date between January 1 and October 1,

institution for the employee’s SIMPLE

inclusive of the applicable year.

IRA.

This is the amount for 2012. For later years, the limit may be increased for cost-of-living adjustments. The IRS announces the increase, if any, in a news release, in

the Internal Revenue Bulletin, and on the IRS’s website at IRS.gov.