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# Savings Incentive Match Plan for Employees (SIMPLE) IRA

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As an employer, you can offer a salary deferral plan for your employees easily and affordably.

A SIMPLE IRA allows you to offer a salary deferral plan without the cost or administrative responsibilities associated with traditional 401(k) plans.

## Eligibility to Contribute

- As an employer you can contribute for yourself and your employees at any age.
- Works well for companies with 100 or fewer employees earning at least $5,100 in compensation and desire for a simple low cost retirement plan.

## Maximum Annual Contribution

- Employer (required): Either dollar-for-dollar matching up to 3% of compensation, or 2% of compensation to all eligible employees. Beginning on 1/1/2024, employers may make an optional, additional contribution up to the lesser of 10% of compensation or $5,000 (indexed for inflation).
- Employee: Up to 100% of compensation or $16,500 for 2025, not to exceed 100% of compensation (for those age 50 and over the limits increase to $20,000 for 2025). Beginning in 2025, the catchup for those ages 60 to 63 increases to the greater of $5,250 or 150% of the regular catchup limit, whichever is less.

## Tax-Deductible Contributions

- Employers can deduct contributions from federal taxable income.
- Employee can make pre-tax contributions.

## Taxation of Earnings and Withdrawals

Tax-deductible contributions and earnings are taxed as ordinary income when withdrawn.

## Types of Investments

Stocks, bonds, mutual funds and Advisory Products available through a WF Advisors brokerage account.

## Withdrawal Penalties

There is a 25% IRS additional tax if withdrawn prior to two years from the first deposit into the participants account. After that, a 10% additional tax applies before age 59½ unless exception applies.

Exceptions:

- Death
- Disability
- Medical expenses in excess of 10% of AGI
- Health insurance premiums if unemployed for 12 consecutive weeks
- Qualifying higher education expenses
- Qualifying first time home purchase ($10,000 lifetime limit)
- Qualified military reservist
- Substantially equal periodic payments made over life expectancy
- Involuntary IRS levies
- Conversion to a Roth IRA
- Up to $5,000 for qualified adoption / birth expenses

## Required Withdrawals

The age to start Required Minimum Distributions (RMDs) begins at age 73 (Does not affect participants who turned age 72 on or before 12/31/2022.).

## Deadline to Set Up and Fund

- Must establish by October 1 of the first plan year.
- Salary Deferrals must be deposited as soon as possible, but no later than 30 days after the end of the month in which the amount would otherwise have been payable to the employees in cash.
- Employer contribution may be made through the business’ tax filing due date plus extensions.

## Commissions and Fees

Vary by account and investment option

## Interested in learning more about SIMPLE IRA plans?

Call us at 1-877-493-4727
Investment and Insurance Products are:

- Not Insured by the FDIC or Any Federal Government Agency
- Not a Deposit or Other Obligation of, or Guaranteed by, the Bank or Any Bank Affiliate
- Subject to Investment Risks, Including Possible Loss of the Principal Amount Invested

Investment products and services are offered through WF Advisors, a trade name used by WF Clearing Services, LLC and WF Advisors Financial Network, LLC, separate registered broker-dealers and non-bank affiliates of WF & Company.

WF and Company and its Affiliates do not provide tax or legal advice. This communication cannot be relied upon to avoid tax penalties. Please consult your tax and legal advisors to determine how this information may apply to your own situation. Whether any planned tax result is realized by you depends on the specific facts of your own situation at the time your tax return is filed.

Information published by WF Bank, N.A., WF Advisors, or one of its affiliates as part of this website is published in the United States and is intended only for persons in the United States.

PM-08072026-7617506.1.1

LRC-0225

## Compare our plans

Get a side-by-side comparison of our business retirement plans.

## More resources

- Expand Employee Benefits

## Still have questions?

### Call Us

WF Advisors

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1-877-493-4727

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