What is a SIMPLE-IRA?
Who can participate?
Self-employed individuals, small-business owners, and any business with 100 or fewer employees that don't have another existing retirement plan.
Who can use the plan?
- There are no age restrictions. Employees are automatically eligible if they received at least $5,000 from the employer in any 2 preceding years and are expected to earn at least $5,000 in the current year.
- An employer can choose less restrictive participation requirements. For example, an employer can expand the group of eligible employees by reducing or eliminating the minimum compensation requirement.
- Employers must have 100 or fewer employees and cannot maintain any other employer sponsored retirement plan.
- There's no fee to establish an account.
- We charge $25 a year for each Vanguard fund in a SIMPLE IRA. We'll waive the fee if you have at least $50,000 in qualifying Vanguard assets.
- Certain employee notifications are required annually, but there are no IRS reporting rules.
- All contributions to your SIMPLE IRA belong to you immediately, and you can withdraw them at any time.
- If you withdraw before age 59½, you're subject to a federal penalty tax of 25% if you take the distribution within the first 2 years of participating in the plan and 10% if taken after that time. Certain exceptions may apply.
- You can’t take a loan from your SIMPLE IRA.
- You’ll pay ordinary income tax on any taxable distributions.
Ready to get started?
If you're new to Vanguard, give us a call.
Are you a Vanguard client looking to open a SIMPLE-IRA? Set up your new plan today.
Learn more about small-business retirement
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Looking to enrich your existing retirement plan with quality mutual funds? Our investment-only service opens the door for you to offer Vanguard funds.
Move your plan to Vanguard
Consider moving the small-business plan you hold elsewhere to Vanguard. You can enjoy high-quality, low-cost funds and reliable service for your portfolio.
All investing is subject to risk, including the possible loss of the money you invest.
For more information about Vanguard funds or ETFs, visit vanguard.com to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing.