Simple IRA – allowable as Roth
Have there been any updates changes when it comes to the Roth deferrals for Simple IRA’s?
2025 Plan that allows the Roth deferrals –
Are they able to defer both full regular and catch up limits into Roth?
And the company match will always continue to go into the Pre-tax column?
Thanks
Matt
Permalink Submitted by Alan - IRA critic on Mon, 2024-11-18 23:16
The IRS provided applicable guidance for these contributions in Notice 2024-2. Some IRA custodians currently support these Roth contributions including Roth catch up and Roth matching contributions and some do not. Employers are not required to offer SIMPLE IRA Roth contributions or to mandate them without employee agreement. The Notice specifies how such contributions are to be reported and coded on Forms W-2 (salary reduction but not matching) including withholding requirements and 1099R for matching and non elective Roth contributions (no 10% penalty applies). For example, a Roth SIMPLE matching contribution is reported on Form 1099R as taxable income for the year IN WHICH the contribution is made.
Roth SIMPLE catchup contributions and matching contributions presumably follow suit with the basic salary reduction contributions. Therefore a Roth salary reduction contribution must be matched with a Roth and catchup contributions also Roth. No guidance yet on an employee ability to split salary reduction contributions between pre tax and Roth, but no reason why not other than the administrative and reporting hassle and the complexity of corrective actions if there is an error.