On October 21, the Internal Revenue Service (IRS) announced 2023 inflation-adjusted limits for all retirement plans, including SIMPLE IRA plans. Employees who are participants in employer-sponsored SIMPLE IRA plans can contribute $15,500 for 2023. This has increased from the 2022 contribution limit of $14,000. Additionally, any eligible employee that will attain the age of 50 by December 31, 2023, can defer an additional $3,500 for a total of $19,000.
Each year, generally by November 1, employers sponsoring SIMPLE IRA plans must provide notice to eligible employees which employer contribution election they will be making for the upcoming calendar year. The notification to eligible employees must indicate whether you will be providing a match of up to 3% or, alternatively, a 2% discretionary contribution. Eligible employees are given the opportunity to defer a portion of their wages for the upcoming year. That election must be made by January 1.
Generally, employees that have earned $5,000 in any two preceding calendar years and that are expected to earn $5,000 or more in the upcoming calendar year are eligible. However, plans may have less restrictive requirements, so it is a good idea to check your plan document regarding employee eligibility.
Need help understanding your plan’s requirements? BerganKDV can help. Contact us today with your questions and one of our team members would be happy to assist.