Discussion:SIMPLE Plan Employer Contributions

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Discussion Forum Index --> Advanced Tax Questions --> SIMPLE Plan Employer Contributions
Discussion Forum Index --> Tax Questions --> SIMPLE Plan Employer Contributions

BARBOLEARY (talk\|edits) said:	2 January 2008
A small company started a SIMPLE Plan in February. The two owners and several employees made salary deferrals to the plan. If one of the two owners quit in November, does the company have to match salary deferrals for the salary earned from January to November or from February to November and would the match be made on the salary earned to the date of termination?

JR1 (talk\|edits) said:	January 2, 2008
I would say yes without looking it up. While the company match can be paid later, it's determined based on the deferral checks, isn't it? So 3% of the pay during that time, or the deferral, whichever is lower.

TexCPA (talk|edits) said:

2 January 2008

The IRS requires that employees' elective deferrals be deposited into each participant's SIMPLE-IRA as soon as possible, but no later than the 30th day following the last day of the month in which the deferrals are withheld from the employees' compensation.

Did the owner that quite decide to stop contributing prior to? Review the Simple Plan docs as well.

TexCPA

NYEA (talk|edits) said:

3 January 2008

SIMPLE plans must use a CALENDAR year. The following assumes the employer is using the 3% match method and no other method.

IRS Notice 98-4 in Q&A in D-4 says: A. D-4: Under a SIMPLE IRA Plan, an employer is generally required to make a contribution on behalf of each eligible employee in an amount equal to the employee's salary reduction contributions, up to a limit of 3 percent of the employee's COMPENSATION for the ENTIRE calendar year.