Simple IRA match

Submitted by ShipsnGiggles on Tue, 2022-11-22 20:23

I can never get my head around the matching formula. I am looking for clarity regarding the compensation used to determine 3% match

SIMPLE IRA plan effective April 2022

1. Do I use the compensation from the effective date (April 2022) through 12/31? or January 1 – December 31?
2. A participant has comp in excess of $500,000. My understanding is the annual compensation limit of $305,000 doesn’t apply to the match (but it does apply to the nonelective). Therefore, is the match based on 3% of $500,000 ($15,000). That doesn’t seem correct as the match would be in excess of the deferral amount of $14,000 –

Thank you



Submitted by Alan - IRA critic on Wed, 2022-11-23 02:18

  1. Use the compensation for the entire calendar year.
  2. No matter how much the participant makes, the matching contribution is limited to their salary reduction contributions. It’s 3% of comp or the salary reduction contribution amount, whatever amount is less. In this case, the salary reduction contribution amount is less.

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