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Small Business Retirement Plans

SIMPLE IRA
Designed for small businesses, a SIMPLE IRA is an easy plan to administer and maintain. An employer makes tax-deductible contributions to SIMPLE IRA accounts for himself and his employees (if any). Employees get to participate in their retirement savings too through salary deferral contributions.

How do I get started?

Your preferred investment option:

Azzad Mutual Funds

Download Important Information

Prospectus

Minimum to open

$500

Download SIMPLE IRA Application

Application

Contributions

Eligibility

If you have fewer than 100 employees and don't maintain another employer sponsored plan, you can establish a SIMPLE IRA.

Contribution limit

Employee: Lesser of $11,500 or 100% of participant’s compensation. If age 50 or over, a “catch-up” contribution is also allowed. This additional catch-up contribution amount is $2,500. Employer: Generally, a dollar-for-dollar match up to 3% of pay or a 2% non-elective contribution for each eligible employee.

Funding requirements

Mandatory employer contributions & optional employee contributions (deducted from paycheck).

Deadline

To contribute to a SIMPLE IRA for the current year, employer must establish the plan before October 1 of that year.
Employer contributions must be made annually by the employer's tax-filing deadline, including extensions. Employee contributions are deducted from employees' salaries and must be deposited at least monthly.

Annual Tax Reporting

No complicated forms to complete. No annual filing with IRS.

Vesting

100% Immediate

Tax Advantages

Contributions

Tax-deductible*

Earnings

Grow tax-deferred (until withdrawn)

Withdrawals

Taxable

Withdrawals

Withdrawals after age 59½

Withdrawals are taxable income in the year received.

Withdrawals before age 59½

10% early withdrawal penalty before age 59½ (and does not meet one of the early withdrawal exceptions), withdrawals will be taxed. Penalty-free withdrawals permitted before age 59½ for first-time home purchase up to $10,000, higher education expenses, in event of disability or death. If the withdrawal occurs within first two years of participation in the SIMPLE IRA plan, the 10% penalty is increased to 25%.

Required withdrawals at age 70½

You must take out what are known as required minimum distributions from your plan when you reach age 70½.

Key Strengths

Key Tradeoffs

Simple to establish & maintain
Substantial contribution limits
Employees may contribute
Flexible employer contributions

Must include all eligible employees
Employees are 100% vested
Mandatory Employer Contributions
Not allowed to maintain any other employer plan

* Whether or not the employee's contribution is deductible depends on the rules governing IRAs. This information is not intended as tax advice. For more complete guidance on your particular financial situation, please consult your tax advisor or speak to an Azzad investment advisor at 888-862-9923. Please make sure to read the Azzad mutual funds' prospectus.

Establish a SIMPLE IRA at the appropriate time of the year (before October 1 for the year you want to contribute).
Set up a plan document by using either IRS Form 5304-SIMPLE or 5305-SIMPLE.
Give each employee notice of the plan before the beginning of the annual enrollment period. Provide employees at least 60 days to choose whether or not to contribute to the plan.
Employees establish their individual SIMPLE IRAs prior to the date contributions must be made under the plan by completing the Azzad Funds SIMPLE IRA Form. Make sure to give each employee a copy of the funds' prospectus.
Inform your payroll person that you have established a SIMPLE IRA. Let them know how much each employee wishes to have deducted from their paycheck. Have payroll send a check (which includes employee salary deferrals and employer contributions) payable to Azzad Funds. Make sure to include a spreadsheet with each person's contribution amount to:

Traditional IRA account holders are required to take a minimum distribution each year; beginning no later than April 1 of the year following the year they turn age 70½. Of course, you can always withdraw more than the required minimum if you wish, but if you withdraw less than required, you will be subject to a federal penalty tax.