IRS Announces Model Simple Retirement Plan

WASHINGTON - The Internal Revenue Service today announced the release of Form 5305-SIMPLE. Section 1421 of the Small Business Job Protection Act of 1996 (P.L. 104-188), signed into law on August 20, 1996, created the Savings Incentive Match Plan for Employees of Small Employers (SIMPLE Plan) effective in 1997. SIMPLE Plans offer small employers a simplified option for providing retirement income for employees through salary reduction and matching contributions that are made to individual retirement accounts or annuities (IRAs).

Form 5305-SIMPLE provides small employers with an easy way to adopt a SIMPLE Plan by using a model plan document, notification to employees, and salary reduction agreement. For the 1997 calendar year, the model SIMPLE Plan can be made effective as early as January 1 and as late as October 1.

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