Eligibility Requirements for SIMPLE IRAs

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Eligibility Requirements for SIMPLE IRAs

Employees (including self-employed individuals who received earned income) must be allowed to participate in their employer’s SIMPLE plan if they:

• Received at least $5,000 in compensation from the employer during any two years prior to the current year, and
• Are reasonably expected to receive at least $5,000 in compensation during the calendar year for which contributions are made.

An employer may exclude from eligibility the following:

• Employees whose retirement benefits are covered by a union contract
• Employees who are nonresident aliens and received no earned income from sources within the United States
• Employees who would not have been eligible employees if an acquisition, disposition, or similar transaction had not occurred during the year