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2002 4 Satisfied (26 Votes)
2012 4.9 Satisfied (332 Votes)
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One of the biggest benefits to opening a SIMPLE IRA is that theyre much easier to set up and less expensive to run than a typical 401(k) plan or other qualified plans. Thats because they have lower administrative costs and fewer regulations to worry about.
Use Form 5304-SIMPLE if you allow each plan participant to select the financial institution for receiving his or her SIMPLE IRA plan contributions. Use Form 5305-SIMPLE if you will deposit all SIMPLE IRA plan contributions at an employer-designated financial institution.
The SIMPLE 401(k) plan is a cross between a SIMPLE IRA and a traditional 401(k) plan and offers some features of both plans. For both the SIMPLE IRA and the SIMPLE 401(k), eligible employers must have no more than 100 employees who have received at least $5,000 in compensation from the employer for the previous year.
IRS Form 5305-SIMPLE, Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) - for Use with a Designated Financial Institution, if you require that all contributions under the SIMPLE IRA plan be initially deposited with a designated financial institution.
An employer should use Form 5304-SIMPLE if it allows each plan participant to select the financial institution for receiving the participants SIMPLE IRA plan contributions. An employer should use Form 5305-SIMPLE if it will deposit all SIMPLE IRA plan contributions at an employer-designated financial institution.
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Use Form 5304-SIMPLE if you permit plan participants to select the financial institution to receive their SIMPLE IRA plan contributions. Use Form 5305-SIMPLE if you require all contributions under the SIMPLE IRA plan to be initially deposited at a financial institution you designate.
The IRS requires that contributions to a SIMPLE IRA be reported on the Form 5498 for the year they are actually deposited to the account, regardless of the year for which theyre made.
Pub. 590, Individual Retirement Arrangements (IRAs). Form 5305A-SEP is a model salary reduction simplified employee pension (SEP) used by an employer to permit employees to make elective deferrals to a SEP described in section 408(k). Note: SEPs permitting elective deferrals cannot be established after 1996.

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