SIMPLE Retirement Accounts (SIMPLE IRAs)

The savings incentive match plan for employees (SIMPLE IRA) is sponsored by employers and is a replacement for salary reduction simplified employee pensions (SARSEPS). The employer may set up IRAs for individual employees. The employer makes annual contributions by:

matching up to 3% of pay for employees who contribute, or contributing 2% of pay for all employees whether they contribute or not.

Employee contributions are limited to the lesser of $11,500 for 2009 (up from $10,500 for 2008) or 100% of compensation. Employees age 50 or over may make additional catch-up contributions of $2,500.