SIMPLE IRA for a new business
If two people are starting a new business partnership, can they open a SIMPLE IRA plan immediately and contribute for themselves? Then, if they hire new employees in the future, can those new employees be subject to the two years of $5,000 compensation rule before they are eligible to participate in the plan?
Permalink Submitted by Alan - IRA critic on Thu, 2020-01-16 00:53
The owners cannot have broader eligibility requirements than the other employees. Therefore, they will have to complete the 5304 or 5305 SIMPLE eligibility requirements allowing full coverage for the first year. Then for 2021, they can begin to require prior earnings to be eligible. Eventually, this can limit eligibility for new hires.