SIMPLE IRA

All employers with fewer than 100 employees

The employer can restrict eligibility to employees with earnings of at least $5,000 during any two of the last five preceding years and employees who are reasonably expected to earn at least $5,000 in the current year

Full plan year (plans beginning January 1): Notice must be given to employees by Nov. 1 of the year before the first plan year

Short plan year (plans beginning Jan. 2 – Dec. 1): Employees must be given 60 days notice. Since Dec. 1 is the last date on which a plan can begin for any given year, Oct. 1 is the last date that notice can be given to establish a short plan year.

The lesser of 100% of compensation or $11,500 in 2010

$2,500 in 2010

Mandatory employer contribution of either a 3% match on deferrals or a non-elective contribution of 2% regardless of deferral status

Distributions are taxed when paid out to the participant

Eligible at any time

Other monies may not be rolled into a SIMPLE IRA account

A 25% penalty applies to distributions taken in the first two years of plan participation (unless the participant is over age 59½)

A 10% penalty is applicable on distributions taken prior to age 59½ after the two-year period ends

A participant must begin taking distributions at the attainment of age 70½. The first minimum distribution must be taken by April 1st of the year following the year containing this triggering event.