The SIMPLE IRA is a Savings Incentive Match PLan for Employees. The SIMPLE IRA allows employee deferrals and employer matching contributions but does not require non-discrimination testing or extensive reporting.

Once assets are in the SIMPLE IRA, Traditional IRA rules apply with one major exception-the 10% premature distribution penalty is increased to 25% for the first two years of participation.

Quick Facts - Simple IRA

Contributions
Employer Contributions (Either Matching or Nonelective) Matching Contributions Nonelective Contributions	As follows: lesser of 3% of your compensation or 100% of salary reduction contributions 2% of compensation regardless of salary reduction contributions Employer may elect a reduced 1% of compensation no more than 2 out of 5 rolling calendar years
Employee Deferral Contributions: Employee Deferrals 2009 Age 50+ Employee Deferrals 2010 Age 50+	As follows: lesser of $11,500 or 100% of compensation lesser of $14,000 or 100% of compensation lesser of $11,500 or 100% of compensation lesser of $14,000 or 100% of compensation
Regular IRA contributions	Not allowed
Distributions
Prior to Age 59 1/2: Year 1-2 Year 3+	Premature Distribution: taxable and 25% penalty within first two years of participation 10% penalty unless exception applies
Age 59 1/2+	Regular Distribution - taxable
Required Beginning Date (RBD) - April 1 following the year in which you turn 70 1/2	RBD - 50% penalty if minimum not taken. Taxable Distribution.
Required Minimum Distribution (RMD) - must be taken annually by each Dec. 31st following account holder's RBD	RMD - 50% penalty if minimum not taken. Taxable Distribution.
RMD Calculation:	Previous year-end balance / life expectancy = RMD

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