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brchiz

Simple IRA Eligibility

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This may not be the right forum to post this question, however, I thought I would ask anyway.  I am setting up a SIMPLE IRA for my small business and am trying to make any employee that has been with the company for at least 1-year eligible for the program.  The way the IRS Form 5305 outlines eligibility requirements makes it difficult to set the requirements at a simple 1-year of service requirement.  Unless I am interpreting it wrong, it is based on income in the previous 0, 1 or 2 calendar years...  so, If I set it at $5000 in 1-calendar year, someone hired on December 1st 2015 making $5000 per month would become eligible as quickly as one month later on 01/01/2016.  If I set it to $5000 in 2 preceding calendar years, that same employee would become eligible on 01/01/2017 which is what I would want... the problem is, if that same person was hired on 01/01/2016, they would not become eligible until 01/01/2018 which would be 24-months of service.  $5000+ earned in 2016, $5000+ earned in 2017 (2 preceding calendar years), expected to earn $5000+ in 2018 (current calendar year).

 

Am I looking at this wrong?  Any other resource recommendations would be appreciated.

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Thanks for the feedback...  I understand that is it based on compensation, however, It can also be from 0-2 preceding years.  I am just trying to figure out the best way to set this up so it is only made available to employees that have been with the company for a year or more.  I am leaning towards $100 in the preceding 2 calendar years which should make people eligible in their 13th month of employment correct?  The part that gets me is the "Preceding" term.  If I pick 2 preceding years would that mean it would not be until their 3rd calendar year with the company when they would qualify?

 

Sorry for all the questions...  I just want to make sure people don't get to participate too soon and also not have to wait more than a year to participate.

 

Also, since they state you can have less stringent but not more stringent rules, can I set it up as 2-preceding years and let employees participate starting with their 13th month of employment?

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