simple ira eligibility
Hello,
Please help clarify these statements from the Form-5304:
Limited Eligibility. Eligibility is limited to employees who are described in both (i) and (ii) below:
(i)
Current compensation. Employees who are reasonably expected to receive at least $
in compensation
(not to exceed $5,000) for the calendar year.
(ii)
Prior compensation. Employees who have received at least $
in compensation (not to exceed $5,000)
during any
calendar year(s) (insert 0, 1, or 2) preceding the calendar year.
This means an employee must meet BOTH (i) and (ii)?
So, if the employer put “2 preceding years” as a condition, new hires should wait for two years?
If so, would it be 2 years from the exact hire-date? or is it 2 calendar years?
I heard from somewhere that if one works 12/31/2018 and 01/01/2019 can technically meet the 2-yr rule. is that correct?
Thank you!
Permalink Submitted by Alan - IRA critic on Fri, 2019-03-15 04:30
Yes, both i and ii normally apply, but by entering 0 for both items in ii, then effectively ii is eliminated. In ii, years refer to calendar years. If 2 years is entered, then an employee must have earned at least the stated amount in two different calendar years. Of course, an employee might be able to meet the requirement for the year of hire even when hired late in that year.