SIMPLE IRA, SIMPLE 401(k), 401(k) PLAN COMPARISON
01.Core Concepts
(3 OF 3) 401(k) Plans SIMPLE 401(k) SIMPLE IRA Employer may contribute Same as SIMPLE IRA except for the employer- match cannot be reduced to as low as 1% for no more than 2 out of 5 years, including the year of election. The employer must generally make: • A dollar-for-dollar match up to 3% (4% for electing large employers) of pay, or • A 2% (3% for electing large employers) nonelective contribution for each eligible employee. Employer Contribution Yes Same as 401(k) No Loans Permitted Permitted, but a possible 10% penalty if under the age of 59½ (unless penalty exception applies) Same as 401(k) Permitted, but 10% penalty if under the age of 59½ (unless penalty exception applies). If withdrawals are made within the first two years of participation, the 10% penalty is increased to 25% (unless a penalty exception applies). In-Service Withdrawals