Businesses with 100 or fewer employees, including state and local governments and tax-exempt organizations, are eligible for SIMPLE IRAs.
Any employee who earns $5,000 during any two preceding years and who is expected to earn $5,000 in the current year is eligible; certain employees can be excluded. The employer may also specify less restrictive eligibility requirements on the SIMPLE adoption agreement to expand the group of employees who are eligible.
May be changed annually
Minimum contribution required for all eligible employees earning at least $5,000 during the year:
Plan establishment – SIMPLE plans must be established by October 1 of the current calendar year, provided a SIMPLE IRA was not previously maintained (exceptions may apply for new employers). However, there is no specific deadline by which American Funds must receive the SIMPLE Adoption Agreement, application and/or check. The plan can be established as long as the employer signed the adoption agreement on or before October 1 of the applicable year.
Employers are required to submit investments electronically through our Online Group Investments website, which simplifies the contribution process and offers the following benefits:
Participants can monitor their investments and make exchanges via our 24-hour voice response system or the American Funds website.
The participant controls the distributions.
Aggregation of participant IRA accounts under a SIMPLE IRA plan depends on the plan agreement selected by the plan sponsor. When a plan sponsor signs an American Funds prototype agreement, all plan contributions are required to come to American Funds. When a sponsor selects another prototype of an IRA Model Agreement, some of the contributions may come to American Funds, but the participants are not required to establish an account with American Funds. As a result, accounts will be aggregated as follows:
For help creating an investment mix tailored to your financial goals, contact your financial professional.
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.