A “SIMPLE” (Savings Incentive Match Plan For Employers) is a retirement plan that may be established by employers, including self-employed individuals. These plans are comparatively inexpensive, and combine an employer match to the employee contributions. The employer is allowed a tax deduction for contributions made to the SIMPLE. The employer has two alternatives when it comes to making contributions.
Contributions to SIMPLE IRAs are immediately 100% vested, and the IRA owner directs the investments. Yearly contributions are capped at $12,500, plus catch-up contributions of an additional $3,000 for employees 50 years of age and older.
You must begin taking distributions from a SIMPLE retirement plan by April 15th of the following year after you reach the age of 70 ½. After that you must take your distributions by the end of each calendar year (Dec. 31st). Distributions are based on the value of your account and life expectancy. You can take the required amount from each of your IRA accounts, or you can take the required amount out of just one account, provided the overall distribution amount is correct. If you do not take your required distribution the IRS will impose penalties – which can be substantial. However you can always take more than the minimum required.