SIMPLE IRA Reporting
A Savings Incentive Match Plan for Employees (SIMPLE) IRA earns its acronym for a reason: It's designed to be easy. Unlike larger plans, such as a 401k, the SIMPLE IRA has no special IRS filings and no discrimination testing requirement. Employers inform the IRS what they've done in their SIMPLE plans by taking a deduction on taxes and providing copies of certain employee communication documents.
Other People Are Reading
-
Employer Tax Deduction
-
Employers may deduct the value of contributions to SIMPLE IRAs from their taxable income. These contributions are part of the business operation, so they will be deducted on the expenses portion of your business tax form. Sole proprietors and partners deduct contributions for employees as business expenses, but the contributions for themselves are taken off of their individual 1040 forms.
Form W-2
-
Employer contributions are not reported as part of employee's W-2 wages, tips and salaries income. Instead, employers check the "Retirement Plan" option in box 13. Employees do not pay federal income tax on their deferral contributions to a SIMPLE plan, but they are responsible for Social Security, Medicare and unemployment taxes once they have been part of the the plan for two years. The amount of employees' deferrals should be added to their taxable wages on the Form W-2 after the two-year period is complete.
-
5498s and 1099-Rs
-
The total amount contributed to an employee's SIMPLE IRA is reported on the IRS Form 5498. If employees withdraw money from the plan, that amount is reported on a 1099-R form. In most cases, the IRA provider generates and mails these forms on your behalf. A copy of each form goes to the employee and to the IRS. In many cases, these are services offered by the IRA provider.
Other Reporting
-
Employers can make changes to SIMPLE plans once per year, effective January 1. In the 60-day period prior to that date, employees may start, stop or change salary deferral contributions. Employers are required to notify employees of this option and any changes to the plan prior to the 60-day period each year. Employers also are required to send out account statements at least once per year. Your IRA provider can assist you with these requirements.
-
