What is a SIMPLE-IRA?
Tax deferral
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.
Investment choices
Participants can select from more than 100 Vanguard mutual funds, including many from our low-cost Admiral™ shares class. And there's no minimum initial investment.
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.
- 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.
833-339-5357
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.