The SIMPLE Retirement Plan Gets Simpler

Savings retirement plans have certainly helped many people sleep better at night. There is currently more than $24 trillion in retirement assets in the U.S. However, one criticism with retirement plans has been a certain lack of flexibility. Thankfully, that changed for the better recently.  

Previously, a SIMPLE plan could only accept rollover contributions from another SIMPLE plan. (SIMPLE plans are retirement vehicles for small business owners and their employees.) However, this rule has changed under the 2015 Consolidated Appropriations Act. A participant in a SIMPLE plan who has participated in it for at least two years may now rollover distributions received from other qualified retirement plans [e.g., 401(k), 403(b), or governmental 457] to their SIMPLE plan account. The employer that sponsors the SIMPLE plan must verify that the participant has met the two-year participation requirement in order to make the rollover. 

An employer that does not sponsor another qualified retirement plan and has less than 100 employees can sponsor a savings incentive match plan for employees (SIMPLE plan) without being subject to most of the requirements imposed on qualified retirement plans such as nondiscrimination testing. 

So just what are the benefits of this change in the law? Employees can consolidate and better track their retirement investments and quite possibly save money on plan fees. As for small business owners, they now have another benefit in their toolbox to help retain employees or attract new ones.