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3 Replies Latest reply: Sep 15, 2010 10:20 PM by LUCKIEST RSS

Simple IRA employee eligibility

JimofSonoma Newbie
Currently Being Moderated
I was going over the retirement benefits with someone we recently hired and had a question about when they would be eligible for our SIMPLE IRA plan. The minimal requirement of any Simple IRA is:

"Any employee who has received at least $5,000 in compensation during any two years preceding the current calendar year, and is reasonably expected to receive at least $5,000 during the current calendar year is eligible to participate in the SIMPLE IRA."

Does this mean that if the new employee earns more than $5000 between now and the end of the year that they will then be eligible starting Jan 1 2011? In the past we had waited a year before employees were eligible for our previous 401K plan, and I thought that was fairly standard, but might be different for the Simple.

Thanks,
Jim
  • Re: Simple IRA employee eligibility
    LUCKIEST Master
    Currently Being Moderated
    Simple IRA employee eligibility

    Who prepared your IRA plan?? Do you have a lawyer?? An accountant??
    • Re: Simple IRA employee eligibility
      JimofSonoma Newbie
      Currently Being Moderated
      The great thing about the Simple IRA is that you don't really need a lawyer or an accountant. Although it does cause problems when I have questions like this one. I called Vanguard (where we have to IRA) and the person there said the employee would not have to be eligible until Jan 1 2012 (although we could do it sooner), but his reasoning made no sense to me, so now I'm asking here.
  • Re: Simple IRA employee eligibility
    JimofSonoma Newbie
    Currently Being Moderated
    Just thought it over again and I think the guy from Vanguard was right, it would be Jan 1 2012. The employee needs to have made atleast $5000 for two calendar years, so they would make $5000 in 2010, and then still have to make $5000 in 2011. Although that actually seems too long to me, so might just keep it as 1 year from hire date, just have to keep track of when that is, fortunately we don't have many employees.

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