What is a SIMPLE IRA account?

Savings Incentive Match Plan for Employees of Small Employers

A SIMPLE plan (Savings Incentive Match Plan for Employees of Small Employers) is a tax-deferred retirement savings plan that allows employees and employers to contribute to a traditional IRA set up for employees.  To qualify, employers must have no more than 100 employees who have received at least $5,000 in compensation from the employer in the past year.  While very much like a SIMPLE 401(K), the SIMPLE IRA has some differences in the plan structure, including lower mandated employer contributions and the inability for employees to borrow from their account balances in the plan (because of the IRA structure).