Simple Plan Question

Submitted by Kevin O'Hearn on Tue, 2022-06-28 17:46

Hello,

I have a (Bob) who owns two separate companies, Company A and Company B, and his ownership in both companies represents a control group. He has one SIMPLE plan that covers both companies.

He receives $100k in wages from Company A and $175k in wages from company B. When determining the compensation that the SIMPLE match is calculated on, would the combination of both salaries be used? So would the match be calculated using $275k as the compensation?

Any guidance would be appreciated. Thank you.



Submitted by Alan - IRA critic on Wed, 2022-06-29 00:04

Yes, 275k.  Of course, since Bob’s salary reduction contributions are limited to the SIMPLE IRA limit, total matching contributions will similarly be limited regardless of how many salaries he collects.



Submitted by William Tuttle on Wed, 2022-06-29 12:23

  • SIMPLE IRA employer matching contributions are not subject to the compensation limit.
  • They are only indirectly limited by the employee deferral limit (2022 = $14K, + $3K > age 50).
  • $14K / 3% = $466,666.67, $17K / 3% = $566,666.67


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