TurboTax FAQ
TurboTax FAQ
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Is a SIMPLE IRA a retirement plan option when I'm self-employed?

Yes, a Savings Incentive Match Plan for Employees, or SIMPLE IRA, is a retirement plan option when you’re self-employed and a sole proprietor. It’s easy to establish and doesn’t have the start-up or operating costs of other types of retirement plans.

When you’re a sole proprietor and have a SIMPLE IRA plan, you’re treated as both an employer and an employee when calculating and reporting your own plan contributions and limits:

  • As long as you don’t exceed your net earnings, you can contribute up to $12,500 in 2016 ($15,500 if you're 50 or older) as an employee.
  • As an employer, you make either a 2% fixed contribution or a 3% matching contribution.

Three steps to establishing a SIMPLE IRA plan:

  • Execute a written agreement to provide benefits to all eligible employees
  • Give employees certain information about the agreement
  • Set up an IRA account for each employee