Simple IRA rules
Been getting conflicting rules.
Have a client (has no plan documents, just Simple IRAs for employees with Frank/Temp)that wants to match both of his employees contributions. A. employee is putting in $1040 and the employer wants to match it and B. employee is putting in $200 and the employer will match it, plus the employer wants to add another $4800 on top of the $200 match.
I thought Simple IRA’s you could only match up to 3% of employees compensation?
A employee has a salary of 25k, which 3% means employer can only contribute $750
B employee has a salary of 80k, which 3% means employer can only contribute $2400.
Am I correct on the above or can the employer go above the 3% and match the employees contributions and also add more money to it?
Can the employer take these higher contributions and matching off his taxes as pension contributions?
thank you for any insight and help on this,
Douglas
Permalink Submitted by Martin Helmer on Thu, 2013-12-19 21:55
The employer seems to be making up his own rules as he goes along. But since the plan fails to meet section 408(p) and Notice 98-4 at several points—lack of prior notice, lack of a written plan, lack of salary reduction agreement, contributions made by employee, et al, it’s not a valid SIMPLE and not entitled to any pension deduction. He could still do a SEP for 2013.