About SIMPLE


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About SIMPLE–IRAs

The SIMPLE–IRA Plan was designed to make it easier for small businesses to offer a tax-advantaged, company-sponsored retirement plan. The SIMPLE plan is a flexible, easy to administer retirement plan for businesses with 100 or fewer employees. SIMPLE plans are funded by employer contributions and can be funded by elective employee salary deferrals.

	Key features of a Fidelity SIMPLE–IRA plan

	Why establish your SIMPLE–IRA plan at Fidelity?

	Download or order a SIMPLE–IRA Plan Establishment Kit

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	Frequently Asked Questions About SIMPLE–IRAs

Key Features of a Fidelity SIMPLE–IRA Plan

Below are seven key things small business owners should know about the features of a Fidelity SIMPLE–IRA:

	Broad eligibility requirements

	Significant tax advantages

	Flexible contribution requirements

	Self–directed investments

	Access to assets

	Low cost and minimum administrative requirements

	Establishment deadlines

Generally, any small business that employs 100 or fewer employees who earned at least $5,000 in the preceding year can establish a SIMPLE–IRA plan, provided the employer does not concurrently maintain any other employer–sponsored retirement plan. Once you know that your company can establish a SIMPLE–IRA plan, you need to determine employee eligibility.

The eligibility rules for employee participation are slightly different than the rules determining company eligibility. Generally, eligible employees include those who:


•		Have earned at least $5,000 in compensation from the employer in any two preceding years (whether or not consecutive), and
•		Are reasonably expected to earn $5,000 during the current year

While employers cannot make these eligibility requirements more restrictive, they can generally liberalize them to include more employees.

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Contributing to a SIMPLE–IRA plan can help small business owners save on their business taxes as well as their personal income taxes.

, you can generally deduct any contributions you make on behalf of your plan participants from your business expenses.

A special non–refundable tax credit for 50% of certain plan expenses up to a maximum of $500 a year for the first three plan years may be available.

you and any eligible employees can elect to defer part of your salary and direct that money into an individual SIMPLE–IRA. Because these contributions are deferred before certain taxes are withheld, they actually reduce contributing participants’ current taxable income.

A non–refundable tax credit may be available to individuals who make pre–tax contributions to a SIMPLE–IRA. The credit applies to the first $2,000 in contributions. There are certain eligibility requirements that must be met and the rate of credit depends on the individuals adjusted gross–income.

Any earnings within a SIMPLE–IRA enjoy tax–deferred growth until withdrawn. When earnings aren’t eroded by taxes each year, they can compound faster.

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– Eligible employees can elect to contribute up to 100% of compensation up to a maximum of $10,500 for the 2008 plan year and $11,500 for the 2009 plan year salary reduction. (The amount elected by the employee may be expressed as a percentage of compensation or as a specific dollar amount.)

Additionally, participants age 50 and older in 2008 or 2009 may be able to make an additional annual $2,500 catch–up elective deferral contribution to their SIMPLE–IRA.

– Employers can choose from two different contribution methods – and can even switch between these options each year, provided certain notification requirements are met:


•		Matching Option – requires employer to match each participant’s contributions dollar–for–dollar – up to 3% of compensation but no more than $10,500 for the 2008 plan year or $11,500 for the 2009 plan year for investors under age 50, $13,000 for 2008 or $14,000 for 2009. Also allows the employer to reduce the employer’s match to as little as 1% of each participant’s compensation for any two years in a five–year period.
•		Non–Elective Contribution Option – requires employer to contribute 2% of each eligible employee’s compensation each year — up to a maximum of $4,600 for the 2008 plan year and $4,900 for 2009 regardless of whether the participant contributes or not (the maximum annual compensation on which contributions can be based is $230,000 for 2008 and $245,000 for 2009).

For more information, see Frequently Asked Questions About SIMPLE–IRAs.

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A Fidelity SIMPLE–IRA Plan offers access to a broad array of investment options, including:


•		Over 140 Fidelity mutual funds
•		Funds from other well–known mutual fund companies through Fidelity FundsNetwork^®
•		Individual stocks and bonds
•		CDs and U.S. Treasuries

You and your employees can enjoy discounted commissions when you trade stocks and options in your SIMPLE–IRA through the Brokerage package.

Each SIMPLE–IRA participant has a separate account and may generally direct his or her own investments within the account.

For more information, see Frequently Asked Questions About SIMPLE–IRAs.

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Like a Traditional IRA, a SIMPLE–IRA plan does allow participants to withdraw their money at any time. However, to encourage long term saving for retirement, distributions from a SIMPLE–IRA in the first two years of participation are subject to a higher early withdrawal penalty than nonqualified distributions made from Traditional IRAs or Roth IRAs.

If your participants are under age 59½:


•		Withdrawals taken within the first two years of plan participation will generally be subject to a 25% early withdrawal penalty¹
•		Withdrawals taken after the first two years will generally be subject to a 10% early withdrawal penalty²

1 Withdrawals taken within the first two years of plan participation are not permitted for purposes of conversion to a Roth IRA or rollover by transfer to an IRA other than a SIMPLE–IRA.

2 These early withdrawal penalties do not apply to those participants who have attained age 59½ or are taking distributions for death, disability, substantially equal periodic payments, medical expenses in excess of 7.5% of AGI, health insurance premiums by certain unemployed individuals, first–time home purchases, qualified higher education expenses, or on account of an IRS levy.

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Two key advantages for an employer to establish a Fidelity SIMPLE–IRA plan are that it is cost-effective to establish and easy to maintain.


•		No special plan–level tax reporting is required for the employer each year
•		No discrimination testing required
•		No need to track vesting, since all contributions are immediately 100% vested (which means each employee owns all of the assets in his or her SIMPLE–IRA immediately and can take these assets with them if leaving the company.)

For more information, see Frequently Asked Questions About SIMPLE–IRAs.

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For employers who want to establish a SIMPLE–IRA plan for the current tax year, you must set up the plan and notify your employees by October 1 of the current tax year. (An exception applies for businesses which are established after October 1. Please refer to the Fidelity SIMPLE–IRA plan establishment kit for more information.)

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Why Establish Your SIMPLE–IRA Plan at Fidelity

Fidelity offers employers support for SIMPLE–IRA plans:

– When you choose Fidelity for your SIMPLE–IRA plan, you’ll benefit from the knowledgeable support of our dedicated SIMPLE Service Team. The SIMPLE Service Team will assist you with questions you may have in establishing the plan.

– To simplify the contribution process, SIMPLE–IRA contributions must be electronically transferred through the Automated Clearing House (ACH). Fidelity has developed the Electronic Funding Service to make it convenient and cost effective for SIMPLE plan clients to access the ACH. This service is a very efficient way to submit SIMPLE–IRA contributions. In addition to taking less processing time than checks, contributions can be invested faster.

Fidelity PlanManager is a Web site specifically designed with easy plan administration in mind. PlanManager enables you to make employee allocations quickly and accurately – and on a timeframe that accommodates your busy schedule.

For more information, see Frequently Asked Questions About SIMPLE–IRAs.

– Not only will Fidelity help you set up the funding process for your SIMPLE–IRA plan, we’ll continue to provide ongoing assistance to you and your employees.

– Fidelity will automatically generate a number of helpful reports for employers including:


•		Monthly Plan Level Statements – a summary report of certain plan activity, including all contributions
•		Customized plan summary description – an annual summary of the benefits and features of your Fidelity SIMPLE–IRA Plan

– While you are setting up your SIMPLE–IRA Plan, you can call your SIMPLE Service Team toll–free whenever you have questions. After you establish your plan, our dedicated Retirement Representatives are available to help answer questions, provide updates on the market value of plan assets, and assist with any allocation changes.

Fidelity offers a full range of services for your employees, including:


•		Toll–free access to account information – 24 hours a day
•		Dedicated Retirement Representatives who are available toll–free to help answer your employee’s questions about the plan or their investment options
•		Assistance through Fidelity’s Investor Centers conveniently located throughout the country
•		Periodic account statements and year-end tax information sent to each of your plan participants

Fidelity offers the employers a choice of pricing elections, regardless of which investment package is selected. The business owner may select one of the following two options for the SIMPLE–IRA plan fee:

	Option 1	Option 2
Fee:	$25 annual fee per participant*	$350 annual fee per plan*
Collected from:	Fee is collected from each participant’s Fidelity SIMPLE–IRA	Fee is collected from the employer
Benefit:	More economical for smaller business owners while still providing an important retirement benefit to your employees	Maximum retirement benefit to your employees if your business pays for the SIMPLE–IRA plan fee

*Regardless of the number of participants in your Fidelity SIMPLE–IRA plan.

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If you’re a small business owner and ready to open a SIMPLE–IRA plan, select one of the options below.


•		If you are an employer and would like additional information, download the forms you need to open a Fidelity SIMPLE–IRA Plan
•		Or request a Fidelity SIMPLE–IRA Plan Establishment Kit to be mailed to you.
•		If you would like assistance completing the Adoption Agreement or would prefer to discuss your options, call a Fidelity Retirement Representative at 800–544–5373.

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** IRA brokerage account fee has been eliminated on Fidelity’s Traditional, Roth, SEP and Rollover IRAs. Fund expenses and brokerage commissions still apply. Depending on your situation, fees may include low–balance fees, short–term trading fees, and account closing fees.


	Spotlight

		Download the Forms to Open a SIMPLE–IRA Plan

		Open a No–Fee IRA Today!**

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