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File My 1040x Electronically

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File My 1040x Electronically

File my 1040x electronically Part Six -   Figuring Your Taxes and Credits The eight chapters in this part explain how to figure your tax and how to figure the tax of certain children who have more than $2,000 of unearned income. File my 1040x electronically They also discuss tax credits that, unlike deductions, are subtracted directly from your tax and reduce your tax dollar for dollar. File my 1040x electronically Chapter 36 discusses the earned income credit. File my 1040x electronically Chapter 37 discusses a wide variety of other credits, such as the adoption credit. File my 1040x electronically Table of Contents 30. File my 1040x electronically   How To Figure Your TaxIntroduction Figuring Your Tax Alternative Minimum Tax (AMT) Tax Figured by IRSFiling the Return 31. File my 1040x electronically   Tax on Unearned Income of Certain ChildrenWhat's New Introduction Useful Items - You may want to see: Which Parent's Return To UseParents Who Do Not File a Joint Return Parent's Election To Report Child's Interest and DividendsEffect of Making the Election Figuring Child's Income Figuring Additional Tax Tax for Certain Children Who Have Unearned IncomeProviding Parental Information (Form 8615, lines A–C) Step 1. File my 1040x electronically Figuring the Child's Net Unearned Income (Form 8615, Part I) Step 2. File my 1040x electronically Figuring Tentative Tax at the Parent's Tax Rate (Form 8615, Part II) Step 3. File my 1040x electronically Figuring the Child's Tax (Form 8615, Part III) 32. File my 1040x electronically   Child and Dependent Care CreditReminders Introduction Useful Items - You may want to see: Tests To Claim the CreditQualifying Person Test Earned Income Test Work-Related Expense Test Joint Return Test Provider Identification Test How To Figure the CreditFiguring Total Work-Related Expenses Earned Income Limit Dollar Limit Amount of Credit How To Claim the CreditTax credit not refundable. File my 1040x electronically Employment Taxes for Household Employers 33. File my 1040x electronically   Credit for the Elderly or the DisabledIntroduction Useful Items - You may want to see: Are You Eligible for the Credit?Qualified Individual Income Limits How to Claim the CreditCredit Figured for You Credit Figured by You 34. File my 1040x electronically   Child Tax CreditIntroduction Useful Items - You may want to see: Qualifying Child Amount of CreditLimits on the Credit Claiming the Credit Additional Child Tax Credit Completing Schedule 8812 (Form 1040A or 1040)Part I Parts II–IV 35. File my 1040x electronically   Education CreditsIntroduction Useful Items - You may want to see: Who Can Claim an Education Credit Qualified Education ExpensesNo Double Benefit Allowed Adjustments to Qualified Education Expenses 36. File my 1040x electronically   Earned Income Credit (EIC)What's New Reminders Introduction Useful Items - You may want to see: Do You Qualify for the Credit?If Improper Claim Made in Prior Year Part A. File my 1040x electronically Rules for EveryoneRule 1. File my 1040x electronically Your AGI Must Be Less Than: Rule 2. File my 1040x electronically You Must Have a Valid Social Security Number (SSN) Rule 3. File my 1040x electronically Your Filing Status Cannot Be Married Filing Separately Rule 4. File my 1040x electronically You Must Be a U. File my 1040x electronically S. File my 1040x electronically Citizen or Resident Alien All Year Rule 5. File my 1040x electronically You Cannot File Form 2555 or Form 2555-EZ Rule 6. File my 1040x electronically Your Investment Income Must Be $3,300 or Less Rule 7. File my 1040x electronically You Must Have Earned Income Part B. File my 1040x electronically Rules If You Have a Qualifying ChildRule 8. File my 1040x electronically Your Child Must Meet the Relationship, Age, Residency, and Joint Return Tests Rule 9. File my 1040x electronically Your Qualifying Child Cannot Be Used By More Than One Person To Claim the EIC Rule 10. File my 1040x electronically You Cannot Be a Qualifying Child of Another Taxpayer Part C. File my 1040x electronically Rules If You Do Not Have a Qualifying ChildRule 11. File my 1040x electronically You Must Be at Least Age 25 but Under Age 65 Rule 12. File my 1040x electronically You Cannot Be the Dependent of Another Person Rule 13. File my 1040x electronically You Cannot Be a Qualifying Child of Another Taxpayer Rule 14. File my 1040x electronically You Must Have Lived in the United States More Than Half of the Year Part D. File my 1040x electronically Figuring and Claiming the EICRule 15. File my 1040x electronically Your Earned Income Must Be Less Than: IRS Will Figure the EIC for You How To Figure the EIC Yourself ExamplesExample 1. File my 1040x electronically John and Janet Smith (Form 1040A) Example 2. File my 1040x electronically Kelly Green (Form 1040EZ) 37. File my 1040x electronically   Other CreditsWhat's New Introduction Useful Items - You may want to see: Nonrefundable CreditsAdoption Credit Alternative Motor Vehicle Credit Alternative Fuel Vehicle Refueling Property Credit Credit to Holders of Tax Credit Bonds Foreign Tax Credit Mortgage Interest Credit Nonrefundable Credit for Prior Year Minimum Tax Plug-in Electric Drive Motor Vehicle Credit Residential Energy Credits Retirement Savings Contributions Credit (Saver's Credit) Refundable CreditsCredit for Tax on Undistributed Capital Gain Health Coverage Tax Credit Credit for Excess Social Security Tax or Railroad Retirement Tax Withheld Prev  Up  Next   Home   More Online Publications
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File my 1040x electronically 3. File my 1040x electronically   SIMPLE Plans Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: SIMPLE IRA PlanWho Can Set Up a SIMPLE IRA Plan? Who Can Participate in a SIMPLE IRA Plan? How To Set Up a SIMPLE IRA Plan Notification Requirement Contribution Limits When To Deduct Contributions Where To Deduct Contributions Tax Treatment of Contributions Distributions (Withdrawals) More Information on SIMPLE IRA Plans SIMPLE 401(k) Plan Topics - This chapter discusses: SIMPLE IRA plan SIMPLE 401(k) plan Useful Items - You may want to see: Publications 590 Individual Retirement Arrangements (IRAs) 3998 Choosing A Retirement Solution for Your Small Business 4284 SIMPLE IRA Plan Checklist 4334 SIMPLE IRA Plans for Small Businesses Forms (and Instructions) W-2 Wage and Tax Statement 5304-SIMPLE Savings Incentive Match Plan for Employees of Small Employers (SIMPLE)–Not for Use With a Designated Financial Institution 5305-SIMPLE Savings Incentive Match Plan for Employees of Small Employers (SIMPLE)–for Use With a Designated Financial Institution 8880 Credit for Qualified Retirement Savings Contributions 8881 Credit for Small Employer Pension Plan Startup Costs A savings incentive match plan for employees (SIMPLE plan) is a written arrangement that provides you and your employees with a simplified way to make contributions to provide retirement income. File my 1040x electronically Under a SIMPLE plan, employees can choose to make salary reduction contributions to the plan rather than receiving these amounts as part of their regular pay. File my 1040x electronically In addition, you will contribute matching or nonelective contributions. File my 1040x electronically SIMPLE plans can only be maintained on a calendar-year basis. File my 1040x electronically A SIMPLE plan can be set up in either of the following ways. File my 1040x electronically Using SIMPLE IRAs (SIMPLE IRA plan). File my 1040x electronically As part of a 401(k) plan (SIMPLE 401(k) plan). File my 1040x electronically Many financial institutions will help you set up a SIMPLE plan. File my 1040x electronically SIMPLE IRA Plan A SIMPLE IRA plan is a retirement plan that uses SIMPLE IRAs for each eligible employee. File my 1040x electronically Under a SIMPLE IRA plan, a SIMPLE IRA must be set up for each eligible employee. File my 1040x electronically For the definition of an eligible employee, see Who Can Participate in a SIMPLE IRA Plan , later. File my 1040x electronically Who Can Set Up a SIMPLE IRA Plan? You can set up a SIMPLE IRA plan if you meet both the following requirements. File my 1040x electronically You meet the employee limit. File my 1040x electronically You do not maintain another qualified plan unless the other plan is for collective bargaining employees. File my 1040x electronically Employee limit. File my 1040x electronically   You can set up a SIMPLE IRA plan only if you had 100 or fewer employees who received $5,000 or more in compensation from you for the preceding year. File my 1040x electronically Under this rule, you must take into account all employees employed at any time during the calendar year regardless of whether they are eligible to participate. File my 1040x electronically Employees include self-employed individuals who received earned income and leased employees (defined in chapter 1). File my 1040x electronically   Once you set up a SIMPLE IRA plan, you must continue to meet the 100-employee limit each year you maintain the plan. File my 1040x electronically Grace period for employers who cease to meet the 100-employee limit. File my 1040x electronically   If you maintain the SIMPLE IRA plan for at least 1 year and you cease to meet the 100-employee limit in a later year, you will be treated as meeting it for the 2 calendar years immediately following the calendar year for which you last met it. File my 1040x electronically   A different rule applies if you do not meet the 100-employee limit because of an acquisition, disposition, or similar transaction. File my 1040x electronically Under this rule, the SIMPLE IRA plan will be treated as meeting the 100-employee limit for the year of the transaction and the 2 following years if both the following conditions are satisfied. File my 1040x electronically Coverage under the plan has not significantly changed during the grace period. File my 1040x electronically The SIMPLE IRA plan would have continued to qualify after the transaction if you had remained a separate employer. File my 1040x electronically    The grace period for acquisitions, dispositions, and similar transactions also applies if, because of these types of transactions, you do not meet the rules explained under Other qualified plan or Who Can Participate in a SIMPLE IRA Plan, below. File my 1040x electronically Other qualified plan. File my 1040x electronically   The SIMPLE IRA plan generally must be the only retirement plan to which you make contributions, or to which benefits accrue, for service in any year beginning with the year the SIMPLE IRA plan becomes effective. File my 1040x electronically Exception. File my 1040x electronically   If you maintain a qualified plan for collective bargaining employees, you are permitted to maintain a SIMPLE IRA plan for other employees. File my 1040x electronically Who Can Participate in a SIMPLE IRA Plan? Eligible employee. File my 1040x electronically   Any employee who received at least $5,000 in compensation during any 2 years preceding the current calendar year and is reasonably expected to receive at least $5,000 during the current calendar year is eligible to participate. File my 1040x electronically The term “employee” includes a self-employed individual who received earned income. File my 1040x electronically   You can use less restrictive eligibility requirements (but not more restrictive ones) by eliminating or reducing the prior year compensation requirements, the current year compensation requirements, or both. File my 1040x electronically For example, you can allow participation for employees who received at least $3,000 in compensation during any preceding calendar year. File my 1040x electronically However, you cannot impose any other conditions for participating in a SIMPLE IRA plan. File my 1040x electronically Excludable employees. File my 1040x electronically   The following employees do not need to be covered under a SIMPLE IRA plan. File my 1040x electronically Employees who are covered by a union agreement and whose retirement benefits were bargained for in good faith by the employees' union and you. File my 1040x electronically Nonresident alien employees who have received no U. File my 1040x electronically S. File my 1040x electronically source wages, salaries, or other personal services compensation from you. File my 1040x electronically Compensation. File my 1040x electronically   Compensation for employees is the total wages, tips, and other compensation from the employer subject to federal income tax withholding and the amounts paid for domestic service in a private home, local college club, or local chapter of a college fraternity or sorority. File my 1040x electronically Compensation also includes the employee's salary reduction contributions made under this plan and, if applicable, elective deferrals under a section 401(k) plan, a SARSEP, or a section 403(b) annuity contract and compensation deferred under a section 457 plan required to be reported by the employer on Form W-2. File my 1040x electronically If you are self-employed, compensation is your net earnings from self-employment (line 4 of Short Schedule SE or line 6 of Long Schedule SE (Form 1040)) before subtracting any contributions made to the SIMPLE IRA plan for yourself. File my 1040x electronically How To Set Up a SIMPLE IRA Plan You can use Form 5304-SIMPLE or Form 5305-SIMPLE to set up a SIMPLE IRA plan. File my 1040x electronically Each form is a model savings incentive match plan for employees (SIMPLE) plan document. File my 1040x electronically Which form you use depends on whether you select a financial institution or your employees select the institution that will receive the contributions. File my 1040x electronically Use Form 5304-SIMPLE if you allow each plan participant to select the financial institution for receiving his or her SIMPLE IRA plan contributions. File my 1040x electronically Use Form 5305-SIMPLE if you require that all contributions under the SIMPLE IRA plan be deposited initially at a designated financial institution. File my 1040x electronically The SIMPLE IRA plan is adopted when you have completed all appropriate boxes and blanks on the form and you (and the designated financial institution, if any) have signed it. File my 1040x electronically Keep the original form. File my 1040x electronically Do not file it with the IRS. File my 1040x electronically Other uses of the forms. File my 1040x electronically   If you set up a SIMPLE IRA plan using Form 5304-SIMPLE or Form 5305-SIMPLE, you can use the form to satisfy other requirements, including the following. File my 1040x electronically Meeting employer notification requirements for the SIMPLE IRA plan. File my 1040x electronically Form 5304-SIMPLE and Form 5305-SIMPLE contain a Model Notification to Eligible Employees that provides the necessary information to the employee. File my 1040x electronically Maintaining the SIMPLE IRA plan records and proving you set up a SIMPLE IRA plan for employees. File my 1040x electronically Deadline for setting up a SIMPLE IRA plan. File my 1040x electronically   You can set up a SIMPLE IRA plan effective on any date from January 1 through October 1 of a year, provided you did not previously maintain a SIMPLE IRA plan. File my 1040x electronically This requirement does not apply if you are a new employer that comes into existence after October 1 of the year the SIMPLE IRA plan is set up and you set up a SIMPLE IRA plan as soon as administratively feasible after your business comes into existence. File my 1040x electronically If you previously maintained a SIMPLE IRA plan, you can set up a SIMPLE IRA plan effective only on January 1 of a year. File my 1040x electronically A SIMPLE IRA plan cannot have an effective date that is before the date you actually adopt the plan. File my 1040x electronically Setting up a SIMPLE IRA. File my 1040x electronically   SIMPLE IRAs are the individual retirement accounts or annuities into which the contributions are deposited. File my 1040x electronically A SIMPLE IRA must be set up for each eligible employee. File my 1040x electronically Forms 5305-S, SIMPLE Individual Retirement Trust Account, and 5305-SA, SIMPLE Individual Retirement Custodial Account, are model trust and custodial account documents the participant and the trustee (or custodian) can use for this purpose. File my 1040x electronically   A SIMPLE IRA cannot be a Roth IRA. File my 1040x electronically Contributions to a SIMPLE IRA will not affect the amount an individual can contribute to a Roth or traditional IRA. File my 1040x electronically Deadline for setting up a SIMPLE IRA. File my 1040x electronically   A SIMPLE IRA must be set up for an employee before the first date by which a contribution is required to be deposited into the employee's IRA. File my 1040x electronically See Time limits for contributing funds , later, under Contribution Limits. File my 1040x electronically Credit for startup costs. File my 1040x electronically   You may be able to claim a tax credit for part of the ordinary and necessary costs of starting a SIMPLE IRA plan that first became effective in 2013. File my 1040x electronically For more information, see Credit for startup costs under Reminders, earlier. File my 1040x electronically Notification Requirement If you adopt a SIMPLE IRA plan, you must notify each employee of the following information before the beginning of the election period. File my 1040x electronically The employee's opportunity to make or change a salary reduction choice under a SIMPLE IRA plan. File my 1040x electronically Your decision to make either matching contributions or nonelective contributions (discussed later). File my 1040x electronically A summary description provided by the financial institution. File my 1040x electronically Written notice that his or her balance can be transferred without cost or penalty if they use a designated financial institution. File my 1040x electronically Election period. File my 1040x electronically   The election period is generally the 60-day period immediately preceding January 1 of a calendar year (November 2 to December 31 of the preceding calendar year). File my 1040x electronically However, the dates of this period are modified if you set up a SIMPLE IRA plan in mid-year (for example, on July 1) or if the 60-day period falls before the first day an employee becomes eligible to participate in the SIMPLE IRA plan. File my 1040x electronically   A SIMPLE IRA plan can provide longer periods for permitting employees to enter into salary reduction agreements or to modify prior agreements. File my 1040x electronically For example, a SIMPLE IRA plan can provide a 90-day election period instead of the 60-day period. File my 1040x electronically Similarly, in addition to the 60-day period, a SIMPLE IRA plan can provide quarterly election periods during the 30 days before each calendar quarter, other than the first quarter of each year. File my 1040x electronically Contribution Limits Contributions are made up of salary reduction contributions and employer contributions. File my 1040x electronically You, as the employer, must make either matching contributions or nonelective contributions, defined later. File my 1040x electronically No other contributions can be made to the SIMPLE IRA plan. File my 1040x electronically These contributions, which you can deduct, must be made timely. File my 1040x electronically See Time limits for contributing funds , later. File my 1040x electronically Salary reduction contributions. File my 1040x electronically   The amount the employee chooses to have you contribute to a SIMPLE IRA on his or her behalf cannot be more than $12,000 for 2013 and 2014. File my 1040x electronically These contributions must be expressed as a percentage of the employee's compensation unless you permit the employee to express them as a specific dollar amount. File my 1040x electronically You cannot place restrictions on the contribution amount (such as limiting the contribution percentage), except to comply with the $12,000 limit. File my 1040x electronically   If you or an employee participates in any other qualified plan during the year and you or your employee have salary reduction contributions (elective deferrals) under those plans, the salary reduction contributions under a SIMPLE IRA plan also count toward the overall annual limit ($17,500 for 2013 and 2014) on exclusion of salary reduction contributions and other elective deferrals. File my 1040x electronically Catch-up contributions. File my 1040x electronically   A SIMPLE IRA plan can permit participants who are age 50 or over at the end of the calendar year to also make catch-up contributions. File my 1040x electronically The catch-up contribution limit for 2013 and 2014 for SIMPLE IRA plans is $2,500. File my 1040x electronically Salary reduction contributions are not treated as catch-up contributions for 2013 or 2014 until they exceed $12,000. File my 1040x electronically However, the catch-up contribution a participant can make for a year cannot exceed the lesser of the following amounts. File my 1040x electronically The catch-up contribution limit. File my 1040x electronically The excess of the participant's compensation over the salary reduction contributions that are not catch-up contributions. File my 1040x electronically Employer matching contributions. File my 1040x electronically   You are generally required to match each employee's salary reduction contributions on a dollar-for-dollar basis up to 3% of the employee's compensation. File my 1040x electronically This requirement does not apply if you make nonelective contributions as discussed later. File my 1040x electronically Example. File my 1040x electronically In 2013, your employee, John Rose, earned $25,000 and chose to defer 5% of his salary. File my 1040x electronically Your net earnings from self-employment are $40,000, and you choose to contribute 10% of your earnings to your SIMPLE IRA. File my 1040x electronically You make 3% matching contributions. File my 1040x electronically The total contribution you make for John is $2,000, figured as follows. File my 1040x electronically Salary reduction contributions ($25,000 × . File my 1040x electronically 05) $1,250 Employer matching contribution ($25,000 × . File my 1040x electronically 03) 750 Total contributions $2,000     The total contribution you make for yourself is $5,200, figured as follows. File my 1040x electronically Salary reduction contributions ($40,000 × . File my 1040x electronically 10) $4,000 Employer matching contribution ($40,000 × . File my 1040x electronically 03) 1,200 Total contributions $5,200 Lower percentage. File my 1040x electronically   If you choose a matching contribution less than 3%, the percentage must be at least 1%. File my 1040x electronically You must notify the employees of the lower match within a reasonable period of time before the 60-day election period (discussed earlier) for the calendar year. File my 1040x electronically You cannot choose a percentage less than 3% for more than 2 years during the 5-year period that ends with (and includes) the year for which the choice is effective. File my 1040x electronically Nonelective contributions. File my 1040x electronically   Instead of matching contributions, you can choose to make nonelective contributions of 2% of compensation on behalf of each eligible employee who has at least $5,000 (or some lower amount you select) of compensation from you for the year. File my 1040x electronically If you make this choice, you must make nonelective contributions whether or not the employee chooses to make salary reduction contributions. File my 1040x electronically Only $255,000 of the employee's compensation can be taken into account to figure the contribution limit in 2013 ($260,000 in 2014). File my 1040x electronically   If you choose this 2% contribution formula, you must notify the employees within a reasonable period of time before the 60-day election period (discussed earlier) for the calendar year. File my 1040x electronically Example 1. File my 1040x electronically In 2013, your employee, Jane Wood, earned $36,000 and chose to have you contribute 10% of her salary. File my 1040x electronically Your net earnings from self-employment are $50,000, and you choose to contribute 10% of your earnings to your SIMPLE IRA. File my 1040x electronically You make a 2% nonelective contribution. File my 1040x electronically Both of you are under age 50. File my 1040x electronically The total contribution you make for Jane is $4,320, figured as follows. File my 1040x electronically Salary reduction contributions ($36,000 × . File my 1040x electronically 10) $3,600 2% nonelective contributions ($36,000 × . File my 1040x electronically 02) 720 Total contributions $4,320     The total contribution you make for yourself is $6,000, figured as follows. File my 1040x electronically Salary reduction contributions ($50,000 × . File my 1040x electronically 10) $5,000 2% nonelective contributions ($50,000 × . File my 1040x electronically 02) 1,000 Total contributions $6,000 Example 2. File my 1040x electronically Using the same facts as in Example 1, above, the maximum contribution you make for Jane or for yourself if you each earned $75,000 is $13,500, figured as follows. File my 1040x electronically Salary reduction contributions (maximum amount allowed) $12,000 2% nonelective contributions ($75,000 × . File my 1040x electronically 02) 1,500 Total contributions $13,500 Time limits for contributing funds. File my 1040x electronically   You must make the salary reduction contributions to the SIMPLE IRA within 30 days after the end of the month in which the amounts would otherwise have been payable to the employee in cash. File my 1040x electronically You must make matching contributions or nonelective contributions by the due date (including extensions) for filing your federal income tax return for the year. File my 1040x electronically Certain plans subject to Department of Labor rules may have an earlier due date for salary reduction contributions. File my 1040x electronically When To Deduct Contributions You can deduct SIMPLE IRA contributions in the tax year within which the calendar year for which contributions were made ends. File my 1040x electronically You can deduct contributions for a particular tax year if they are made for that tax year and are made by the due date (including extensions) of your federal income tax return for that year. File my 1040x electronically Example 1. File my 1040x electronically Your tax year is the fiscal year ending June 30. File my 1040x electronically Contributions under a SIMPLE IRA plan for the calendar year 2013 (including contributions made in 2013 before July 1, 2013) are deductible in the tax year ending June 30, 2014. File my 1040x electronically Example 2. File my 1040x electronically You are a sole proprietor whose tax year is the calendar year. File my 1040x electronically Contributions under a SIMPLE IRA plan for the calendar year 2013 (including contributions made in 2014 by April 15, 2014) are deductible in the 2013 tax year. File my 1040x electronically Where To Deduct Contributions Deduct the contributions you make for your common-law employees on your tax return. File my 1040x electronically For example, sole proprietors deduct them on Schedule C (Form 1040) or Schedule F (Form 1040); partnerships deduct them on Form 1065; and corporations deduct them on Form 1120 or Form 1120S. File my 1040x electronically Sole proprietors and partners deduct contributions for themselves on line 28 of Form 1040. File my 1040x electronically (If you are a partner, contributions for yourself are shown on the Schedule K-1 (Form 1065) you receive from the partnership. File my 1040x electronically ) Tax Treatment of Contributions You can deduct your contributions and your employees can exclude these contributions from their gross income. File my 1040x electronically SIMPLE IRA plan contributions are not subject to federal income tax withholding. File my 1040x electronically However, salary reduction contributions are subject to social security, Medicare, and federal unemployment (FUTA) taxes. File my 1040x electronically Matching and nonelective contributions are not subject to these taxes. File my 1040x electronically Reporting on Form W-2. File my 1040x electronically   Do not include SIMPLE IRA plan contributions in the “Wages, tips, other compensation” box of Form W-2. File my 1040x electronically You must, however, include them in the “Social security wages” and “Medicare wages and tips” boxes. File my 1040x electronically You must also include them in box 12. File my 1040x electronically Mark the “Retirement plan” checkbox in box 13. File my 1040x electronically For more information, see the Form W-2 instructions. File my 1040x electronically Distributions (Withdrawals) Distributions from a SIMPLE IRA are subject to IRA rules and generally are includible in income for the year received. File my 1040x electronically Tax-free rollovers can be made from one SIMPLE IRA into another SIMPLE IRA. File my 1040x electronically However, a rollover from a SIMPLE IRA to a non-SIMPLE IRA can be made tax free only after a 2-year participation in the SIMPLE IRA plan. File my 1040x electronically Generally, you or your employee must begin to receive distributions from a SIMPLE IRA by April 1 of the first year after the calendar year in which you or your employee reaches age 70½. File my 1040x electronically Early withdrawals generally are subject to a 10% additional tax. File my 1040x electronically However, the additional tax is increased to 25% if funds are withdrawn within 2 years of beginning participation. File my 1040x electronically More information. File my 1040x electronically   See Publication 590 for information about IRA rules, including those on the tax treatment of distributions, rollovers, required distributions, and income tax withholding. File my 1040x electronically More Information on SIMPLE IRA Plans If you need help to set up or maintain a SIMPLE IRA plan, go to the IRS website and search SIMPLE IRA Plan. File my 1040x electronically SIMPLE 401(k) Plan You can adopt a SIMPLE plan as part of a 401(k) plan if you meet the 100-employee limit as discussed earlier under SIMPLE IRA Plan. File my 1040x electronically A SIMPLE 401(k) plan is a qualified retirement plan and generally must satisfy the rules discussed under Qualification Rules in chapter 4, including the required distribution rules. File my 1040x electronically However, a SIMPLE 401(k) plan is not subject to the nondiscrimination and top-heavy rules discussed in chapter 4 if the plan meets the conditions listed below. File my 1040x electronically Under the plan, an employee can choose to have you make salary reduction contributions for the year to a trust in an amount expressed as a percentage of the employee's compensation, but not more than $12,000 for 2013 and 2014. File my 1040x electronically If permitted under the plan, an employee who is age 50 or over can also make a catch-up contribution of up to $2,500 for 2013 and 2014. File my 1040x electronically See Catch-up contributions , earlier under Contribution Limits. File my 1040x electronically You must make either: Matching contributions up to 3% of compensation for the year, or Nonelective contributions of 2% of compensation on behalf of each eligible employee who has at least $5,000 of compensation from you for the year. File my 1040x electronically No other contributions can be made to the trust. File my 1040x electronically No contributions are made, and no benefits accrue, for services during the year under any other qualified retirement plan sponsored by you on behalf of any employee eligible to participate in the SIMPLE 401(k) plan. File my 1040x electronically The employee's rights to any contributions are nonforfeitable. File my 1040x electronically No more than $255,000 of the employee's compensation can be taken into account in figuring matching contributions and nonelective contributions in 2013 ($260,000 in 2014). File my 1040x electronically Compensation is defined earlier in this chapter. File my 1040x electronically Employee notification. File my 1040x electronically   The notification requirement that applies to SIMPLE IRA plans also applies to SIMPLE 401(k) plans. File my 1040x electronically See Notification Requirement in this chapter. File my 1040x electronically Credit for startup costs. File my 1040x electronically   You may be able to claim a tax credit for part of the ordinary and necessary costs of starting a SIMPLE 401(k) plan that first became effective in 2013. File my 1040x electronically For more information, see Credit for startup costs under Reminders, earlier. File my 1040x electronically Note on Forms. File my 1040x electronically   Please note that Forms 5304-SIMPLE and 5305-SIMPLE can not be used to establish a SIMPLE 401(k) plan. File my 1040x electronically To set up a SIMPLE 401(k) plan, see Adopting a Written Plan in chapter 4. File my 1040x electronically Prev  Up  Next   Home   More Online Publications