Have 100 or fewer employees and predictable cash flow? Take advantage of easy plan-administration, while offering potential tax advantages to your business and employees. Below, you'll find answers to frequently asked questions about SIMPLE IRA plans, rules, contribution limits and more.

Who contributes to a SIMPLE IRA?

The plan is funded by employee salary deferrals and required employer contributions.

How much are employers required to contribute?

You can choose to contribute a flat 2% of compensation for each eligible employee regardless of participation, or a dollar-for-dollar match of employee salary-deferral contributions capped at 3% of compensation. If needed, the cap may be reduced as low as 1% for any 2 years during a 5‑year period.Footnote 1

What are the employee contribution limits?Footnote 2

Employees, including business owners, can defer up to $13,000 ($16,000 for those age 50 or older) of compensation annually.Footnote 1

Who is eligible to participate in a SIMPLE IRA?

Any employee who received $5,000 or more in compensation in any 2 calendar years and is reasonably expected to earn $5,000 or more in the current year.

What investment choices are available?

A full range of investment choices is available, including stocks, bonds, options, ETFs and well-known mutual funds. You and your employees may also consider a savings IRA from Bank of America, N.A. Learn more about investment choices

How much does it cost to set up and administer a SIMPLE IRA?

There are no setup or administrative fees for your business or your employees.

Does the plan take a lot of time to administer?

Not at all. Merrill Edge helps you save time and effort with Merrill Edge E-Contribs for Small Business Retirement Accounts™ — an easy-to-use web-based contribution service. Go to E‑Contribs

What if I prefer to invest with an advisor?

Managed portfolios and one-on-one advice are not available for the Merrill Edge SIMPLE IRA. However, you and your employees will have access to a full range of investments, step-by-step guidance, easy-to-use tools and award-winning research.Footnote 2 Get help when you want it by meeting with a Financial Solutions Advisor in person or on the phone. Learn more about online investing & trading

What are the advantages for employees?

Interest, dividends, employer contributions and other investment earnings have the potential to grow tax deferred until they are withdrawn at retirement. Plus, SIMPLE IRA balances can count toward the account holder's Preferred Rewards status.

When are contributions fully vested?

Employee and employer contributions are 100% vested immediately.

Can participants take a loan or withdraw funds from their SIMPLE IRA before they reach age 59½?

No. Loans are not allowed. Withdrawals before age 59½ are subject to ordinary income tax plus a 10% federal early withdrawal penalty. If funds are withdrawn within 2 years of first participation in a SIMPLE IRA, the early withdrawal penalty is 25% instead of 10%.

What if my business grows beyond 100 employees?

If your business grows, you may wish to consider a Merrill Edge Small Business 401(k). Before making any decisions, speak with your tax and legal advisors about your situation and the requirements for terminating a plan and establishing a new one.

What is the plan establishment deadline?

To fund for the current year, the plan must be established by October 1 of that year. If a business is created after October 1, the plan must be established as soon as administratively feasible (special rules apply).

Is IRS reporting required?

It's not, but employee notification of employer contributions is required annually, typically by November 1 for the upcoming plan year.

Compare small business retirement plans

Need help or have questions?

Call 855.667.9451855.667.9451
Mon-Fri 9 a.m. - 8 p.m. ET to speak with a Financial Solutions Advisor

Important disclosures

Footnote 
Contribution and compensation limits are subject to a cost-of-living adjustment annually pursuant to the Internal Revenue Code. Contribution and compensation limits for subsequent years may vary.
Footnote 
Institutional Investor magazine announced BofA Merrill Lynch Global Research as one of the top global research firms from 2011-2018 based on surveys held throughout the year. The magazine creates rankings of the top research analysts in a wide variety of specializations, drawn from the choices of portfolio managers and other investment professionals at more than 1,000 firms. BofA Merrill Lynch Global Research is research produced by BofA Securities, Inc ("BofAS") and/or one or more of its affiliates. BofAS is a registered broker-dealer, Member SIPC popup, and wholly owned subsidiary of Bank of America Corporation. For more information about this award, go to Institutional Investor popup. Rankings and recognition from Institutional Investor are no guarantee of future investment success and do not ensure that a current or prospective client will experience a higher level of performance results and such rankings should not be construed as an endorsement.
You are eligible to enroll in the Preferred Rewards program if you have an active, eligible Bank of America® personal checking or Bank of America Advantage Banking account and maintain a three-month average combined balance in your qualifying Bank of America deposit accounts and/or your qualifying Merrill Edge® and Merrill Lynch® investment accounts of at least $20,000 for the Gold tier, $50,000 for the Platinum tier, or $100,000 for the Platinum Honors tier. The combined balance is calculated based on your average daily balance for a three calendar month period. Certain benefits are also available without enrolling in Preferred Rewards if you satisfy balance and other requirements. For details on employee qualification requirements, please call Employee Financial Services or visit the Bank of America intranet site. Merrill Lynch Wealth Management clients with greater than $250,000 in assets with Bank of America and Merrill Lynch are eligible for additional banking benefits. Please speak with your Merrill financial advisor for details.
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Merrill Edge is available through Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S), and consists of the Merrill Edge Advisory Center (investment guidance) and self-directed online investing.

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