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September 14, 2011

Deadline for Establishing SIMPLE IRA Plan

First SIMPLE IRA Plan for Employer
If an employer (or a predecessor employer) is establishing a SIMPLE IRA Plan for the first time, the plan must be established between January 1 and October 1. After the October 1 deadline has passed, the employer must wait until the next year in order to establish a SIMPLE IRA Plan.
Exception to October 1 Deadline
An exception applies to a new employer that comes into existence after October 1 of the year that the SIMPLE IRA Plan is being established. For these employers, the SIMPLE IRA Plan can be established after the business is established, but must be done as soon as administratively feasible.
Employer That Previously had A SIMPLE IRA Plan
If the employer (or a predecessor employer) previously had a SIMPLE IRA Plan, that employer may establish the SIMPLE IRA only with an effective date of January 1.

The SIMPLE IRA Plan is established when the employer completes and signs the SIMPLE Plan Agreement. This agreement can be either a:

  • Form 5304-SIMPLE (Not Subject to the Designated Financial Institution Rules), which is the model form that may be used by an employer to establish a SIMPLE IRA Plan that does not use a DFI,
  • Form 5305-SIMPLE (for Use With a Designated Financial Institution), which is a form that may be used by an employer establishing a SIMPLE IRA Plan with a financial institution that is a DFI , or
  • An approved prototype SIMPLE IRA Plan
Note: The deadline for establishing the SIMPLE IRA Plan is different from the deadline by which an employee’s SIMPLE IRA must be established. Click here for Deadline for Establishing the Employee SIMPLE IRA

Tip provided by Denise Appleby

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.


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