What is a SIMPLE-IRA?
Delaying the payment of income taxes on income. For example, owners of traditional IRAs don't pay income taxes on the interest, dividends, or capital gains accumulating in their retirement accounts until they begin making withdrawals.
A SIMPLE (Savings Incentive Match Plan for Employees) IRA is a retirement plan that allows employers and employees of small businesses to make tax-deferred contributions to the plan.
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 eligible if they received at least $5,000 from you in any 2 preceding years and are reasonably expected to earn at least $5,000 in the current year.
- You can expand the group of eligible employees by reducing or eliminating the minimum compensation requirement and set the eligibility to be less restrictive if you choose.
See what Vanguard assets qualify
Eligibility is first calculated using qualifying assets for an individual client. We then combine the qualifying assets of clients sharing a residential address to determine final eligibility*.
Assets that qualify
- Any assets under management of Vanguard Personal Advisor Services.
- Vanguard mutual funds and Vanguard ETFs held by a client in certain personal accounts qualify. Personal account types include: individual non-retirement, education savings accounts, IRAs, Joint, Trust, Custodian, Guardian, UTMA, UGMA, Estate, Sole Proprietorship, and Single-Participant SEP IRA plans.
Note: Vanguard assets in a Vanguard 529 Plan, Vanguard Variable Annuity, Multi-participant SEP IRA plans, SIMPLE, i401k, 403(b), family partnership, family corporation, or employer-sponsored retirement plans for which Vanguard provides recordkeeping services may be included in determining eligibility if you also have a personal account holding Vanguard mutual funds or Vanguard ETFs. Assets held in other account types are not eligible to be included in service eligibility determination.
We review qualifications periodically
The qualification criteria (for example, asset levels) are reviewed periodically and could change at any time. Vanguard reserves the right to discontinue enrollment in any of these services or reassign any investor, without prior notification, to the appropriate service level if the investor fails to continue to meet the applicable qualification criteria. Vanguard reserves the right to amend or cancel selected features and benefits at any time without prior notification.
In addition, ongoing access by any particular investor to individual services, discounts, and exemptions is subject to periodic review and may be restricted based upon criteria established solely by Vanguard. While these services are complimentary, some underlying services may charge fees and expenses. Vanguard does not guarantee any level of service.
*Business addresses and other non-residential addresses are not eligible to be aggregated for purposes of determining services.
- 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
Enhance your retirement plan
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.