When it comes to saving for retirement, there are many different types of retirement accounts available. One popular option is the Simple IRA, which is a retirement savings plan specifically designed for small businesses. The Simple IRA is a great option for both employers and employees looking to save for retirement, and one of the most popular providers of Simple IRA plans is Fidelity.
If you`re considering opening a Simple IRA with Fidelity, it`s important to understand the adoption agreement. This document outlines the terms and conditions of the plan, as well as your responsibilities as an employer or employee. Here`s what you need to know about Fidelity`s Simple IRA adoption agreement.
What is a Simple IRA Adoption Agreement?
A Simple IRA adoption agreement is a legal document that outlines the terms and conditions of a Simple IRA plan. This document is required by the IRS in order to establish a Simple IRA plan, and it must be signed by both the employer and the employees who participate in the plan.
The adoption agreement contains important information about the Simple IRA plan, including eligibility requirements, contribution limits, and distribution rules. It also outlines the responsibilities of both the employer and the employee, as well as any fees associated with the account.
Fidelity`s Simple IRA Adoption Agreement
Fidelity is one of the largest providers of Simple IRA plans, and their adoption agreement is designed to be simple and easy to understand. Here are some of the key features of Fidelity`s adoption agreement:
Eligibility Requirements: In order to be eligible for a Simple IRA with Fidelity, you must be an employee of a small business with 100 or fewer employees. You must also have earned income from that business in the current year.
Contribution Limits: Employees can contribute up to $13,500 to their Simple IRA in 2021, with an additional $3,000 catch-up contribution for those over age 50. Employers must make either a matching contribution of up to 3% of the employee`s salary or a non-elective contribution of 2% of the employee`s salary.
Distribution Rules: Withdrawals from a Simple IRA are subject to income tax and a 10% penalty if taken before age 59 1/2. However, there are some exceptions to this rule, such as for certain medical expenses or for first-time homebuyers.
Responsibilities: Employers are responsible for setting up and administering the Simple IRA plan, as well as making contributions on behalf of their employees. Employees are responsible for choosing how much to contribute and how to invest their funds.
Fees: Fidelity charges a $25 annual maintenance fee for each Simple IRA account, as well as investment fees for the funds chosen by the employee.
Conclusion
If you`re considering opening a Simple IRA with Fidelity, it`s important to understand the terms and conditions of the adoption agreement. This document outlines the rules and responsibilities of both the employer and the employee, as well as any fees associated with the account. By understanding these terms, you can make an informed decision about whether a Simple IRA with Fidelity is the right choice for your retirement savings needs.
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