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SIMPLE IRAs Can be Self-Directed

Published on November 4, 2014

What is a SIMPLE IRA?

SIMPLE stands for savings incentive match plan for employees. It allows employers and employees to make contributions to a Traditional IRA set up for those employees. It’s applicable to self-employed individuals as well (certain limits apply). For employers who do not yet sponsor a retirement savings plan at their workplace, a SIMPLE IRA is a great way to start. These plans are for companies with fewer than 100 employees.

As with SEP IRAs (another type of employer-sponsored retirement plan), there must be a SIMPLE IRA set up for each eligible employee. A SIMPLE IRA is relatively easy to set up and run, and employees may contribute to their accounts through payroll deductions, thereby building up retirement savings by deferring a part of their salaries. The contributions are tax-deferred.

Employers must also contribute to each eligible employee’s SIMPLE IRA in one of two ways: match participants’ contributions or contribute a fixed percentage of all eligible employees’ pay. Each employee owns and controls his/her SIMPLE IRA. You can read more about these retirement plans in the IRS website.

Self-Directed SIMPLE IRAs

For those employees and employers who know their way around alternative investments or who wish to make their own investment decisions, a self-directed SIMPLE IRA can help them control their futures. With a self-directed SIMPLE IRA, the account holder may choose to invest not only in stocks, bonds and mutual funds but in the broad array of alternative assets allowed through self-direction—real estate, precious metals, commodities, unsecured loans, and much more.

The maximum contribution allowed to SIMPLE IRAs is $12,000 in 2014 (this goes up to $12,500 in 2015); for employees over age 50, there is a catch-up contribution of an additional $2500 currently allowed (with an increase to $3,000 in 2015). As we head into the final weeks of the year, there’s still time to make those contributions and meet the annual limit (and build up those retirement savings).

If you’d like to open a self-directed SIMPLE IRA for you and your employees, Next Generation Trust Services can help. Our transaction specialists can answer your questions about the nontraditional investments allowed through self-direction and can guide you along the way.


Click here to find out more about SIMPLE IRAs
Click here to find out more about self-directed IRAs.
Contact us at (888) 857-8058 or Info@NextGenerationTrust.com to get started today.