Investments - Simple IRA
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As an employer, you might wonder, "How can I save a sufficient amount of money for my retirement and provide an attractive, tax-favored savings plan for my employees at the same time?"

The answer is SIMPLE!

A SIMPLE is an employer-sponsored retirement plan that provides employers and employees a convenient way to save money for their retirement. Retirement plans are an excellent way to supplement Social Security, They provide sponsoring employers tax advantages, while helping to attract and retain quality employees,

What other benefits does a SIMPLE provide?

• Sponsoring employers know in advance what their financial commitment will be each year,
• Employers receive a tax deduction for their contribution,
• Employer contributions are not taxable to the employee until the money is withdrawn for retirement.
• All funds are immediately vested to the employee,
• Employee contributions are made with pre-tax dollars,
• There are no annual filing requirements,

Who is eligible for a SIMPLE?

Employers must meet several requirements to be eligible for a SIMPLE:

• Sponsoring employers cannot maintain any other qualified retirement plan to which contributions are being made or benefits accruing to employees,
• Employers can have no more than 1 00 employees who earned $5,000 or more in compensation in the preceding calendar year.
• Companies may not be a member of a parent/subsidiary group or combined group of businesses, unless all eligible employees of the group have the option to participate in the SIMPLE. . Plans must be established by October 1 of the year contributions are to begin.

What is the sponsoring employer's financial commitment?

As the sponsoring employer, you can elect to either:
1) provide a "matching contribution" to employees who voluntarily contribute/defer part of the their income, or
2) make a "non-elective contribution" to all eligible employees, regardless of whether they defer part of their income. (See SIMPLE insert, form EFL-743a.)

What are the employee's options for making contributions?

Employee deferrals are completely voluntary. No one must participate and there is no minimum participation requirement. (See SIMPLE insert, form EFL-743a.)

How are contributions made?

Employers can make regular payments, such as monthly or quarterly, or choose to make a single payment one time per year. Keep in mind that payment(s) must be made between January 1 of the current tax year and the date your federal income tax return is due (including extensions). Employee contributions must be made via payroll deduction during the current tax year.

How are distributions taxed and when can they start?

Since payments to a SIMPLE IRA are deducted for tax purposes (by the employer and employee), benefit payments, including interest earnings, are subject to ordinary income tax, Furthermore, distributions prior to age 59 )!, and within the first two years of participation are subject to ordinary income tax plus a 25% early withdrawal penalty imposed by the IRS, Distributions made prior to age 59 )!, and after two years of participation are subject to ordinary income tax plus a 10% tax penalty, In some instances the 10% tax penalty is not imposed, There is no 10% penalty if the payment: is made because of death or disability; is used to pay medical expenses in excess of 7,5% of Adjusted Gross Income; is paid over the life of the participant or the joint lives of the participant and their designated beneficiary; is used by an un-employed person to pay health insurance premiums; is used by a first-time home buyer to purchase their principle residence or used to pay qualified higher education expenses, Distributions must begin by April 1 of the year following the year in which the participant turns 70 1/2, Be sure to consult your tax advisor for specific details,

How long does the income benefit last?

That is up to you, Your Erie Family Life Agent can review some of the more popular options available with ERIE's SIMPLE IRA

Erie Family Life's SIMPLE IRA offers these valuable and important features:

• Guaranteed savings
• Flexibility
• Stability
• Tax-deferred earnings
• Personal service

Are SIMPLE IRAs guaranteed?

Yes' Erie Family Life Insurance Company guarantees all premium payments and accrued interest earnings.