SIMPLE IRA annual notification
IRS rules require that SIMPLE IRA plan sponsors provide all eligible employees with an annual election period during which they may enter into a salary reduction agreement to contribute to their SIMPLE IRA or change their existing elections. Generally, this election period is the 60-day period immediately preceding Jan. 1 of the calendar year. Employers who fail to provide the required notification may be subject to a $50 IRS penalty for each day such failure continues.
- Prior to the start of the election period, plan sponsors must notify each employee of their opportunity to participate in the plan and provide them with specific plan information. This can be accomplished using the Participation Notice & Summary Description for the SIMPLE IRA Plan prototype document sponsored by Ameriprise Financial Services, Inc. Any employee who becomes eligible to participate in the plan during the year must also be given a 60-day election period, and he or she must receive the required notification materials no later than 60 days before becoming eligible.
- Employers may also provide a Salary Reduction Agreement. Employees complete this form to authorize their employer to withhold an amount from their salary for their SIMPLE IRA contribution. They may also use this form to change the amount of their contribution.
If you have questions about your Ameriprise SIMPLE IRA plan call 800.862.7919.