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SIMPLE IRA

Maximize retirement savings with this flexible plan that allows both employers and employees to contribute.

What is a SIMPLE IRA?

A SIMPLE (Savings Incentive Match Plan for Employees) IRA is a retirement plan that allows 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 doesn't have another plan.

Employer contribution limits

Option 1. Dollar-for-dollar match of employee contributions up to 3% of each employee's compensation. The amount can be reduced to as low as 1% in any 2 out of 5 years.

Option 2. Contribute 2% of each employee's compensation. The maximum compensation used to determine this contribution is $280,000 for the 2019 tax year and $285,000 for the 2020 tax year.

Contributions are deductible and are required every year.

Employee contribution limits

Employees may contribute up to $13,000 for the 2019 tax year ($16,000 for employees age 50 or older) and $13,500 for the 2020 tax year ($16,500 for employees age 50 or older). Employee contributions aren't required every year.

Investment choices

More than 100 Vanguard mutual funds, including many of our index funds with Admiral™ Shares. There's no minimum initial investment.

Eligibility

  • 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.

Vanguard plan features

Vanguard Personal Advisor Services® is available (requires a $50,000 minimum investment).

Account service fees

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.

See what Vanguard assets qualify

Account setup & maintenance

  • There's no fee to establish an account.
  • Certain employee notifications are required annually, but there are no IRS reporting rules.

Withdrawals & loans

  • 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 may not take a loan from your SIMPLE IRA.

Distributions

  • You'll pay ordinary income tax on any taxable distributions.
  • For existing clients, click here to start your digital experience.
  • For new clients, call us at 800-992-7188. A specialist will be able to assist you with your retirement plan needs.

Get complete portfolio management

We can custom-develop and implement your financial plan, giving you greater confidence that you're doing all you can to reach your goals.

Make retirement saving easy

If you don't know how to start saving for retirement, we can help you figure out how much you'll need and how to balance all your savings goals.

Consolidate your accounts

Consider moving accounts you hold elsewhere to Vanguard. You'll enjoy more control of your portfolio now and get a clear picture of your investment strategy.

REFERENCE CONTENT

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Mutual fund

A type of investment that pools shareholder money and invests it in a variety of securities. Each investor owns shares of the fund and can buy or sell these shares at any time. Mutual funds are typically more diversified, low-cost, and convenient than investing in individual securities, and they're professionally managed.

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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.

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Mutual fund

A type of investment that pools shareholder money and invests it in a variety of securities. Each investor owns shares of the fund and can buy or sell these shares at any time. Mutual funds are typically more diversified, low-cost, and convenient than investing in individual securities, and they're professionally managed.

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Index fund

A fund that buys all (or a representative sample) of the securities in a specific index, such as the S&P 500 Index.

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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.