SIMPLE IRA Employer Contribution Limit
SIMPLE (Savings Incentive Match Plan for Employees) IRAs offer small-business employers the ability to contribute to a retirement plan with tax benefits for their employees. Only employers with 100 or fewer employees can offer a SIMPLE IRA.
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Types
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With a SIMPLE IRA, employers can either select a matching option or make nonelective contributions to all eligible employees. To select the nonelective contribution, employers must notify all eligible employees before employees make their decisions as to how much they will defer into their SIMPLE IRAs from their salary.
Matching Contribution
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Employers opting to match their employee's contributions must match their employee's contributions dollar for dollar up to 3 percent of their employees' salaries. However, as of 2010, only the first $245,000 of salary is considered when counting this limit.
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Nonelective Contribution
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Companies that choose to make nonelective contributions must contribute 2 percent of each eligible employee's salary to the SIMPLE IRA no matter how much the employee contributes, even if the employee contributes nothing.
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