Fill - Free fillable Form 5305-SIMPLE: for Use With a Designated Financial (IRS) PDF form

Form 5305-SIMPLE

(Rev. March 2012)

Department of the Treasury

Internal Revenue Service

Savings Incentive Match Plan for

Employees of Small Employers (SIMPLE)—

for Use With a Designated Financial Institution

OMB No. 1545-1502

Do not file

with the Internal

Revenue Service

Name of Employer

establishes the following SIMPLE

IRA plan under section 408(p) of the Internal Revenue Code and pursuant to the instructions contained in this form.

Article I—Employee Eligibility Requirements (complete applicable box(es) and blanks—see instructions)

General Eligibility Requirements. The Employer agrees to permit salary reduction contributions to be made in each calendar year to the

SIMPLE individual retirement account or annuity established at the designated financial institution (SIMPLE IRA) for each employee who meets

the following requirements (select either 1a or 1b):

Full Eligibility. All employees are eligible.

Limited Eligibility. Eligibility is limited to employees who are described in both (i) and (ii) below:

(i)

Current compensation. Employees who are reasonably expected to receive at least in compensation (not to

exceed $5,000) for calendar year.

(ii)

Prior compensation. Employees who have received at least in compensation (not to exceed $5,000) during any

calendar year(s) (insert 0, 1, or 2) preceding the calendar year.

Excludable Employees

The Employer elects to exclude employees covered under a collective bargaining agreement for which retirement benefits were the subject

of good faith bargaining. Note: This box is deemed checked if the Employer maintains a qualified plan covering only such employees.

Article II—Salary Reduction Agreements (complete the box and blank, if applicable—see instructions)

Salary Reduction Election. An eligible employee may make an election to have his or her compensation for each pay period reduced. The total

amount of the reduction in the employee’s compensation for a calendar year cannot exceed the applicable amount for that year. See instructions.

Timing of Salary Reduction Elections

a For a calendar year, an eligible employee may make or modify a salary reduction election during the 60-day period immediately preceding

January 1 of that year. However, for the year in which the employee becomes eligible to make salary reduction contributions, the period

during which the employee may make or modify the election is a 60-day period that includes either the date the employee becomes eligible

or the day before.

In addition to the election periods in 2a, eligible employees may make salary reduction elections or modify prior elections

. If the Employer chooses

this option, insert a period or periods (e.g., semi-annually, quarterly, monthly, or daily) that will apply uniformly to all eligible employees.

c No salary reduction election may apply to compensation that an employee received, or had a right to immediately receive, before

execution of the salary reduction election.

An employee may terminate a salary reduction election at any time during the calendar year. If this box is checked, an employee who

terminates a salary reduction election not in accordance with 2b may not resume salary reduction contributions during the calendar year.

Article III—Contributions (complete the blank, if applicable—see instructions)

Salary Reduction Contributions. The amount by which the employee agrees to reduce his or her compensation will be contributed by the

Employer to the employee’s SIMPLE IRA.

2 a

Matching Contributions

(i)

For each calendar year, the Employer will contribute a matching contribution to each eligible employee’s SIMPLE IRA equal to the

employee’s salary reduction contributions up to a limit of 3% of the employee’s compensation for the calendar year.

(ii)

The Employer may reduce the 3% limit for the calendar year in (i) only if:

(1)

The limit is not reduced below 1%; (2) The limit is not reduced for more than 2 calendar years during the 5-year period ending with

the calendar year the reduction is effective; and (3) Each employee is notified of the reduced limit within a reasonable period of

time before the employees’ 60-day election period for the calendar year (described in Article II, item 2a).

b Nonelective Contributions

(i)

For any calendar year, instead of making matching contributions, the Employer may make nonelective contributions equal to 2% of

compensation for the calendar year to the SIMPLE IRA of each eligible employee who has at least (not more than

$5,000) in compensation for the calendar year. No more than $250,000* in compensation can be taken into account in determining the

nonelective contribution for each eligible employee.

(ii)

For any calendar year, the Employer may make 2% nonelective contributions instead of matching contributions only if:

(1)

Each eligible employee is notified that a 2% nonelective contribution will be made instead of a matching contribution; and

(2)

This notification is provided within a reasonable period of time before the employees’ 60-day election period for the calendar year

(described in Article II, item 2a).

3 Time and Manner of Contributions

The Employer will make the salary reduction contributions (described in 1 above) to the designated financial institution for the IRAs established under

this SIMPLE IRA plan no later than 30 days after the end of the month in which the money is withheld from the employee’s pay. See instructions.

The Employer will make the matching or nonelective contributions (described in 2a and 2b above) to the designated financial institution for

the IRAs established under this SIMPLE IRA plan no later than the due date for filing the Employer’s tax return, including extensions, for

the taxable year that includes the last day of the calendar year for which the contributions are made.

* This is the amount for 2012. For later years, the limit may be increased for cost-of-living adjustments. The IRS announces the increase, if any, in a news release, in

the Internal Revenue Bulletin, and on the IRS’s internet website at IRS.gov.

For Paperwork Reduction Act Notice, see instructions.

Cat. No. 23063F

Form 5305-SIMPLE (Rev. 3-2012)

Page

Article IV—Other Requirements and Provisions

Contributions in General. The Employer will make no contributions to the SIMPLE IRAs other than salary reduction contributions

(described in Article III, item 1) and matching or nonelective contributions (described in Article III, items 2a and 2b).

Vesting Requirements. All contributions made under this SIMPLE IRA plan are fully vested and nonforfeitable.

3 No Withdrawal Restrictions. The Employer may not require the employee to retain any portion of the contributions in his or her SIMPLE

IRA or otherwise impose any withdrawal restrictions.

4 No Cost Or Penalty For Transfers. The Employer will not impose any cost or penalty on a participant for the transfer of the participant’s

SIMPLE IRA balance to another IRA.

5 Amendments To This SIMPLE IRA Plan. This SIMPLE IRA plan may not be amended except to modify the entries inserted in the blanks

or boxes provided in Articles I, II, III, VI, and VII.

Effects Of Withdrawals and Rollovers

a An amount withdrawn from the SIMPLE IRA is generally includible in gross income. However, a SIMPLE IRA balance may be rolled over or

transferred on a tax-free basis to another IRA designed solely to hold funds under a SIMPLE IRA plan. In addition, an individual may roll

over or transfer his or her SIMPLE IRA balance to any IRA or eligible retirement plan after a 2-year period has expired since the individual

first participated in any SIMPLE IRA plan of the Employer. Any rollover or transfer must comply with the requirements of section 408.

b If an individual withdraws an amount from a SIMPLE IRA during the 2-year period beginning when the individual first participated in any

SIMPLE IRA plan of the Employer and the amount is subject to the additional tax on early distributions under section 72(t), this additional tax

is increased from 10% to 25%.

Article V—Definitions

Compensation

General Definition of Compensation. Compensation means the sum of wages, tips, and other compensation from the Employer subject

to federal income tax withholding (as described in section 6051(a)(3)), the amounts paid for domestic service in a private home, local

college club, or local chapter of a college fraternity or sorority, and the employee’s salary reduction contributions made under this plan,

and, if applicable, elective deferrals under a section 401(k) plan, a SARSEP, or a section 403(b) annuity contract and compensation

deferred under a section 457 plan required to be reported by the Employer on Form W-2 (as described in section 6051(a)(8)).

Compensation for Self-Employed Individuals. For self-employed individuals, compensation means the net earnings from self-employment

determined under section 1402(a), without regard to section 1402(c)(6), prior to subtracting any contributions made pursuant to this plan on

behalf of the individual.

Employee. Employee means a common-law employee of the Employer. The term employee also includes a self-employed individual and a

leased employee described in section 414(n) but does not include a nonresident alien who received no earned income from the Employer that

constitutes income from sources within the United States.

3 Eligible Employee. An eligible employee means an employee who satisfies the conditions in Article I, item 1 and is not excluded under

Article I, item 2.

Designated Financial Institution. A designated financial institution is a trustee, custodian, or insurance company (that issues annuity

contracts) for the SIMPLE IRA plan that receives all contributions made pursuant to the SIMPLE IRA plan and deposits those contributions to

the SIMPLE IRA of each eligible employee.

Article VI—Procedures for Withdrawals and Transfers (The designated financial institution will provide the instructions

(to be attached or inserted in the space below) on the procedures for withdrawals of contributions by employees.)

Article VII—Effective Date

This SIMPLE IRA plan is effective

See instructions.

* * * * *

Name of Employer

Address of Employer

By: Signature Date

Name and title

The undersigned agrees to serve as designated financial institution, receiving all contributions made pursuant to this SIMPLE IRA plan and

depositing those contributions to the SIMPLE IRA of each eligible employee as soon as practicable. Upon the request of any participant, the

undersigned also agrees to transfer the participant’s balance in a SIMPLE IRA established under this SIMPLE IRA plan to another IRA without

cost or penalty to the participant.

Name of designated financial institution

Address

By: Signature Date

Name and title

Form 5305-SIMPLE (Rev. 3-2012)

Page 3

Model Notification to Eligible Employees

I. Opportunity to Participate in the SIMPLE IRA Plan

You are eligible to make salary reduction contributions to the SIMPLE

IRA plan. This notice and the attached summary description provide you with information that you should consider before you

decide whether to start, continue, or change your salary reduction agreement.

II. Employer Contribution Election

For the calendar year, the Employer elects to contribute to your SIMPLE IRA (employer must select either (1), (2), or (3)):

(1)

A matching contribution equal to your salary reduction contributions up to a limit of 3% of your compensation for the

year;

(2)

A matching contribution equal to your salary reduction contributions up to a limit of (employer must insert a

number from 1 to 3 and is subject to certain restrictions) of your compensation for the year; or

(3)

A nonelective contribution equal to 2% of your compensation for the year (limited to compensation of $250,000*) if you

are an employee who makes at least (employer must insert an amount that is $5,000 or less) in

compensation for the year.

III. Administrative Procedures

To start or change your salary reduction contributions, you must complete the salary reduction agreement and return it to

(employer should designate a place or

individual) by (employer should insert a date that is not less than 60 days after notice is given).

Model Salary Reduction Agreement

I. Salary Reduction Election

Subject to the requirements of the SIMPLE IRA plan of (name of

employer) I authorize or (which equals of my current rate of pay) to be withheld from

my pay for each pay period and contributed to my SIMPLE IRA as a salary reduction contribution.

% $ %

II. Maximum Salary Reduction

I understand that the total amount of my salary reduction contributions in any calendar year cannot exceed the applicable

amount for that year. See instructions.

III. Date Salary Reduction Begins

I understand that my salary reduction contributions will start as soon as permitted under the SIMPLE IRA plan and as soon as

administratively feasible or, if later, (Fill in the date you want the salary reduction contributions to

begin. The date must be after you sign this agreement.)

IV. Duration of Election

This salary reduction agreement replaces any earlier agreement and will remain in effect as long as I remain an eligible employee

under the SIMPLE IRA plan or until I provide my Employer with a request to end my salary reduction contributions or provide a

new salary reduction agreement as permitted under this SIMPLE IRA plan.

Signature of employee

Date

* This is the amount for 2012. For later years, the limit may be increased for cost-of-living adjustments. The IRS announces the increase, if any, in a news release, in

the Internal Revenue Bulletin, and on the IRS website at IRS.gov.

Form 5305-SIMPLE (Rev. 3-2012)

Page 4

General Instructions

Section references are to the Internal

Revenue Code unless otherwise noted.

Purpose of Form

Form 5305-SIMPLE is a model Savings

Incentive Match Plan for Employees of

Small Employers (SIMPLE) plan

document that an employer may use in

combination with SIMPLE IRAs to

establish a SIMPLE IRA plan described

in section 408(p).

These instructions are designed to

assist in the establishment and

administration of the SIMPLE IRA plan.

They are not intended to supersede any

provision in the SIMPLE IRA plan.

Do not file Form 5305-SIMPLE with

the IRS. Instead, keep it with your

records.

For more information, see Pub. 560,

Retirement Plans for Small Business

(SEP, SIMPLE, and Qualified Plans), and

Pub. 590, Individual Retirement

Arrangements (IRAs).

Note. If you used the March 2002, August

2005, or September 2008 version of Form

5305-SIMPLE to establish a model

Savings Incentive Match Plan, you are not

required to use this version of the form.

Instructions for the

Employer

Which Employers May

Establish and Maintain a

SIMPLE IRA Plan?

To establish and maintain a SIMPLE IRA

plan, you must meet both of the

following requirements:

1. Last calendar year, you had no

more than 100 employees (including

self-employed individuals) who earned

$5,000 or more in compensation from

you during the year. If you have a

SIMPLE IRA plan but later exceed this

100-employee limit, you will be treated

as meeting the limit for the 2 years

following the calendar year in which you

last satisfied the limit.

2. You do not maintain during any part

of the calendar year another qualified

plan with respect to which contributions

are made, or benefits are accrued, for

service in the calendar year. For this

purpose, a qualified plan (defined in

section 219(g)(5)) includes a qualified

pension plan, a profit-sharing plan, a

stock bonus plan, a qualified annuity

plan, a tax-sheltered annuity plan, and a

simplified employee pension (SEP) plan.

A qualified plan that only covers

employees covered under a collective

bargaining agreement for which

retirement benefits were the subject of

good faith bargaining is disregarded if

these employees are excluded from

participating in the SIMPLE IRA plan.

If the failure to continue to satisfy the

100-employee limit or the one-plan rule

described in 1 or 2 above is due to an

acquisition or similar transaction

involving your business, special rules

apply. Consult your tax advisor to find

out if you can still maintain the plan after

the transaction.

Certain related employers (trades or

businesses under common control) must

be treated as a single employer for

purposes of the SIMPLE requirements.

These are:

(1) a controlled group of corporations

under section 414(b);

(2) a partnership or sole proprietorship

under common control under section

414(c); or

(3) an affiliated service group under

section 414(m). In addition, if you have

leased employees required to be treated

as your own employees under the rules

of section 414(n), then you must count

all such leased employees for the

requirements listed above.

What Is a SIMPLE IRA Plan?

A SIMPLE IRA plan is a written

arrangement that provides you and your

employees with an easy way to make

contributions to provide retirement

income for your employees. Under a

SIMPLE IRA plan, employees may

choose whether to make salary

reduction contributions to the SIMPLE

IRA plan rather than receiving these

amounts as part of their regular

compensation. In addition, you will

contribute matching or nonelective

contributions on behalf of eligible

employees (see Employee Eligibility

Requirements below and Contributions

later). All contributions under this plan

will be deposited into a SIMPLE

individual retirement account or annuity

established for each eligible employee

with the designated financial institution

named in Article VII.

When To Use Form

5305-SIMPLE

A SIMPLE IRA plan may be established

by using this Model Form or any other

document that satisfies the statutory

requirements.

Do not use Form 5305-SIMPLE if:

1. You want to permit each of your

eligible employees to choose a financial

institution that will initially receive

contributions. Instead, use Form

5304-SIMPLE, Savings Incentive Match

Plan for Employees of Small Employers

(SIMPLE)—Not for Use With a

Designated Financial Institution;

2. You want employees who are

nonresident aliens receiving no earned

income from you that is income from

sources within the United States to be

eligible under this plan; or

3. You want to establish a SIMPLE

401(k) plan.

Completing Form

5305-SIMPLE

Pages 1 and 2 of Form 5305-SIMPLE

contain the operative provisions of your

SIMPLE IRA plan. This SIMPLE IRA plan

is considered adopted when you have

completed all appropriate boxes and

blanks and it has been executed by you

and the designated financial institution.

The SIMPLE IRA plan is a legal

document with important tax

consequences for you and your

employees. You may want to consult

with your attorney or tax advisor before

adopting this plan.

Employee Eligibility

Requirements (Article I)

Each year for which this SIMPLE IRA plan

is effective, you must permit salary

reduction contributions to be made by all

of your employees who are reasonably

expected to receive at least $5,000 in

compensation from you during the year,

and who received at least $5,000 in

compensation from you in any 2

preceding years. However, you can

expand the group of employees who are

eligible to participate in the SIMPLE IRA

plan by completing the options provided

in Article I, items 1a and 1b. To choose

full eligibility, check the box in Article I,

item 1a. Alternatively, to choose limited

eligibility, check the box in Article I, item

1b, and then insert “$5,000” or a lower

compensation amount (including zero)

and “2” or a lower number of years of

service in the blanks in (i) and (ii) of Article

I, item 1b.

In addition, you can exclude from

participation those employees covered

under a collective bargaining agreement

for which retirement benefits were the

subject of good faith bargaining. You

may do this by checking the box in

Article I, item 2. Under certain

circumstances, these employees must

be excluded. See Which Employers May

Establish and Maintain a SIMPLE IRA

Plan? earlier.

Salary Reduction

Agreements (Article II)

As indicated in Article II, item 1, a salary

reduction agreement permits an eligible

employee to make an election to have

his or her compensation for each pay

period reduced by a percentage

(expressed as a percentage or dollar

amount). The total amount of the

reduction in the employee’s

compensation cannot exceed the

Form 5305-SIMPLE (Rev. 3-2012)

Page 5

applicable amount for any calendar year.

The applicable amount is $11,500 for

2012. After 2012, the $11,500 amount

may be increased for cost-of-living

adjustments. In the case of an eligible

employee who is 50 or older by the end

of the calendar year, the above limitation

is increased by $2,500 for 2012. After

2012, the $2,500 amount may be

increased for cost-of-living adjustments.

Timing of Salary Reduction

Elections

For a calendar year, an eligible employee

may make or modify a salary reduction

election during the 60-day period

immediately preceding January 1 of that

year. However, for the year in which the

employee becomes eligible to make

salary reduction contributions, the period

during which the employee may make or

modify the election is a 60-day period

that includes either the date the

employee becomes eligible or the day

before.

You can extend the 60-day election

periods to provide additional

opportunities for eligible employees to

make or modify salary reduction

elections using the blank in Article II,

item 2b. For example, you can provide

that eligible employees may make new

salary reduction elections or modify prior

elections for any calendar quarter during

the 30 days before that quarter.

You may use the Model Salary

Reduction Agreement on page 3 to

enable eligible employees to make or

modify salary reduction elections.

Employees must be permitted to

terminate their salary reduction elections

at any time. They may resume salary

reduction contributions for the year if

permitted under Article II, item 2b.

However, by checking the box in Article

II, item 2d, you may prohibit an

employee who terminates a salary

reduction election outside the normal

election cycle from resuming salary

reduction contributions during the

remainder of the calendar year.

Contributions (Article III)

Only contributions described below may

be made to this SIMPLE IRA plan. No

additional contributions may be made.

Salary Reduction Contributions

As indicated in Article III, item 1, salary

reduction contributions consist of the

amount by which the employee agrees

to reduce his or her compensation. You

must contribute the salary reduction

contributions to the designated financial

institution for the employee’s SIMPLE

IRA.

Matching Contributions

In general, you must contribute a

matching contribution to each eligible

employee’s SIMPLE IRA equal to the

employee’s salary reduction

contributions. This matching contribution

cannot exceed 3% of the employee’s

compensation. See Definition of

Compensation later.

You may reduce this 3% limit to a

lower percentage, but not lower than

1%. You cannot lower the 3% limit for

more than 2 calendar years out of the

5-year period ending with the calendar

year the reduction is effective.

Note. If any year in the 5-year period

described above is a year before you

first established any SIMPLE IRA plan,

you will be treated as making a 3%

matching contribution for that year for

purposes of determining when you may

reduce the employer matching

contribution.

To elect this option, you must notify

the employees of the reduced limit within

a reasonable period of time before the

applicable 60-day election periods for

the year. See Timing of Salary Reduction

Elections earlier.

Nonelective Contributions

Instead of making a matching

contribution, you may, for any year,

make a nonelective contribution equal to

2% of compensation for each eligible

employee who has at least $5,000 in

compensation for the year. Nonelective

contributions may not be based on more

than $250,000* of compensation.

To elect to make nonelective

contributions, you must notify employees

within a reasonable period of time before

the applicable 60-day election periods

for such year. See Timing of Salary

Reduction Elections earlier.

Note. Insert “$5,000” in Article III, item

2b(i) to impose the $5,000 compensation

requirement. You may expand the group

of employees who are eligible for

nonelective contributions by inserting a

compensation amount lower than

$5,000.

Effective Date (Article VII)

Insert in Article VII the date you want the

provisions of the SIMPLE IRA plan to

become effective. You must insert

January 1 of the applicable year unless

this is the first year for which you are

adopting any SIMPLE IRA plan. If this is

the first year for which you are adopting

a SIMPLE IRA plan, you may insert any

date between January 1 and October 1,

inclusive of the applicable year.

Additional Information

Timing of Salary Reduction

Contributions

The employer must make the salary

reduction contributions to the

designated financial institution for the

SIMPLE IRAs of all eligible employees

no later than the 30th day of the month

following the month in which the

amounts would otherwise have been

payable to the employee in cash.

The Department of Labor has

indicated that most SIMPLE IRA plans

are also subject to Title I of the

Employee Retirement Income Security

Act of 1974 (ERISA). Under Department

of Labor regulations, at 29 CFR

2510.3-102, salary reduction

contributions must be made to the

SIMPLE IRA at the designated financial

institution as of the earliest date on

which those contributions can

reasonably be segregated from the

employer’s general assets, but in no

event later than the 30-day deadline

described previously.

Definition of Compensation

“Compensation” means the amount

described in section 6051(a)(3) (wages,

tips, and other compensation from the

employer subject to federal income tax

withholding under section 3401(a)), and

amounts paid for domestic service in a

private home, local college club, or local

chapter of a college fraternity or sorority.

Usually, this is the amount shown in box

1 of Form W-2, Wage and Tax

Statement. For further information, see

Pub. 15, Circular E, Employer’s Tax

Guide. Compensation also includes the

salary reduction contributions made

under this plan, and, if applicable,

compensation deferred under a section

457 plan. In determining an employee’s

compensation for prior years, the

employee’s elective deferrals under a

section 401(k) plan, a SARSEP, or a

section 403(b) annuity contract are also

included in the employee’s

compensation.

For self-employed individuals,

compensation means the net earnings

from self-employment determined under

section 1402(a), without regard to

section 1402(c)(6), prior to subtracting

any contributions made pursuant to this

SIMPLE IRA plan on behalf of the

individual.

* This is the amount for 2012. For later years, the limit may be increased for cost-of-living adjustments. The IRS announces the increase, if any, in a news release, in

the Internal Revenue Bulletin, and on the IRS’s website at IRS.gov.

Form 5305-SIMPLE (Rev. 3-2012)

Page 6

Employee Notification

You must notify eligible employees prior

to the employees’ 60-day election period

described previously that they can make

or change salary reduction elections. In

this notification, you must indicate

whether you will provide:

1. A matching contribution equal to

your employees’ salary reduction

contributions up to a limit of 3% of their

compensation;

2. A matching contribution equal to

your employees’ salary reduction

contributions subject to a percentage

limit that is between 1 and 3% of their

compensation; or

3. A nonelective contribution equal to

2% of your employees’ compensation.

You can use the Model Notification to

Eligible Employees to satisfy these

employee notification requirements for

this SIMPLE IRA plan. A Summary

Description must also be provided to

eligible employees at this time. This

summary description requirement may

be satisfied by providing a completed

copy of pages 1 and 2 of Form

5305-SIMPLE (including the Article VI

Procedures for Withdrawals and

Transfers from the SIMPLE IRAs

established under this SIMPLE IRA plan).

If you fail to provide the employee

notification (including the summary

description) described above, you will be

liable for a penalty of $50 per day until

the notification is provided. If you can

show that the failure was due to

reasonable cause, the penalty will not be

imposed.

Reporting Requirements

You are not required to file any annual

information returns for your SIMPLE IRA

plan, such as Form 5500, Annual

Return/Report of Employee Benefit Plan

or Form 5500-EZ, Annual Return of

One-Participant (Owners and Their

Spouses) Retirement Plan. However, you

must report to the IRS which eligible

employees are active participants in the

SIMPLE IRA plan and the amount of

your employees’ salary reduction

contributions to the SIMPLE IRA plan on

Form W-2. These contributions are

subject to social security, Medicare,

railroad retirement, and federal

unemployment tax.

Deducting Contributions

Contributions to this SIMPLE IRA plan

are deductible in your tax year

containing the end of the calendar year

for which the contributions are made.

Contributions will be treated as made

for a particular tax year if they are made

for that year and are made by the due

date (including extensions) of your

income tax return for that year.

Choosing the Designated

Financial Institution

As indicated in Article V, item 4, a

designated financial institution is a

trustee, custodian, or insurance

company (that issues annuity contracts)

for the SIMPLE IRA plan that would

receive all contributions made pursuant

to the SIMPLE IRA plan and deposit the

contributions to the SIMPLE IRA of each

eligible employee.

Only certain financial institutions, such

as banks, savings and loan associations,

insured credit unions, insurance

companies (that issue annuity contracts),

or IRS-approved nonbank trustees may

serve as a designated financial institution

under a SIMPLE IRA plan.

You are not required to choose a

designated financial institution for your

SIMPLE IRA plan. However, if you do not

want to choose a designated financial

institution, you cannot use this form (see

When To Use Form 5305-SIMPLE

earlier).

Instructions for the

Designated Financial

Institution

Completing Form

5305-SIMPLE

By completing Article VII, you have

agreed to be the designated financial

institution for this SIMPLE IRA plan. You

agree to maintain IRAs on behalf of all

individuals receiving contributions under

the plan and to receive all contributions

made pursuant to this plan and to

deposit those contributions to the

SIMPLE IRAs of each eligible employee

as soon as practicable. You also agree

that upon the request of a participant,

you will transfer the participant’s balance

in a SIMPLE IRA to another IRA without

cost or penalty to the participant.

Summary Description

Each year the SIMPLE IRA plan is in

effect, you must provide the employer

the information described in section

408(l)(2)(B). This requirement may be

satisfied by providing the employer a

current copy of Form 5305-SIMPLE

(including instructions) together with your

procedures for withdrawals and transfers

from the SIMPLE IRAs established under

this SIMPLE IRA plan. The summary

description must be received by the

employer in sufficient time to comply

with the Employee Notification

requirements on this page.

If you fail to provide the summary

description described above, you will be

liable for a penalty of $50 per day until

the notification is provided. If you can

show that the failure was due to

reasonable cause, the penalty will not be

imposed.

Paperwork Reduction Act Notice. You

are not required to provide the

information requested on a form that is

subject to the Paperwork Reduction Act

unless the form displays a valid OMB

control number. Books or records

relating to a form or its instructions must

be retained as long as their contents

may become material in the

administration of any Internal Revenue

law. Generally, tax returns and return

information are confidential, as required

by section 6103.

The time needed to complete this

form will vary depending on individual

circumstances. The estimated average

time is:

Recordkeeping . . . . 3 hr., 38 min.

Learning about the

law or the form . . . . 2 hr., 26 min.

Preparing the form . . . . 47 min.

If you have comments concerning the

accuracy of these time estimates or

suggestions for making this form

simpler, we would be happy to hear

from you. You can write to the Internal

Revenue Service, Tax Products

Coordinating Committee,

SE:W:CAR:MP:T:M:S, 1111 Constitution

Ave. NW, IR-6526, Washington, DC

20224. Do not send this form to this

address. Instead, keep it for your

records.

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Form 5305-SIMPLE: for Use With a Designated Financial (IRS)

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