SIMPLE IRA Contributions
A husband and wife business owner have a simple IRA and elect to use a 3% match. One employee is also eligible.
The employee will contribute and the company match. However, the owners want to contribute too but not up to the 3% this year. Let’s say an owner wants to contribute $1000. If they contribute $1000 will they then be required to match that 3% to themselves or is it optional to not? If it’s not optional, they’d then need to contribute $500 then match the $500, correct?
Andrew
Permalink Submitted by Alan - IRA critic on Tue, 2018-12-18 19:03
The match is not optional, as the owners are treated like any other employees. The match must equal each owner’s contribution, but is capped at 3% of owner’s compenation. Therefore, to avoid going over 1000 total, they would have to limit their contributions to 500.