Chapter 15 - SIMPLE IRA Plans IRS Form 5304-SIMPLE for Employers The IRS model SIMPLE IRA Plan document, Form 5304-SIMPLE may be used by an employer establishing a SIMPLE IRA Plan that does not use a DFI; that is, for use by employers who allow plan participants to select the financial organizations where their SIMPLE IRAs are established. Form 5304-SIMPLE cannot be used by employers that: * Want to require that all SIMPLE IRA Plan contributions initially go to a financial institution designated by the employer (i.e., employers who do not permit each employee to choose his own financial institution to receive initial SIMPLE IRA Plan contributions). * Allow nonresident aliens to be eligible to participate. Note: Organizations can offer both DFI (designated financial institution) and non-DFI documents to employers. Revised Forms 5304-SIMPLE and 5305-SIMPLE SIMPLE IRA plan documents must contain language that reflects current law. If an employer uses the IRS model Form 5304-SIMPLE or Form 5305-SIMPLE as its document, the revision date of the form must be March 2002 or later. The IRS updated Forms 5304-SIMPLE and 5305-SIMPLE in March of 2012; however, the changes were very minor. Employers that used the March 2002 version or a newer version are not required to use the March 2012 version. Prototype SIMPLE IRA Plans for Employers Some employers use a prototype SIMPLE IRA Plan agreement. A prototype agreement is not drafted by the IRS and thus is not preapproved. A prototype agreement must be submitted to the IRS for an opinion letter. [Rev. Proc. 97-29] The IRS has released an August 2013 version of Form 5306-A, Application for Approval of Prototype Simplified Employee Pension (SEP) or Savings Incentive Match Plan for Employees of Small Employers (SIMPLE IRA Plan). If an employer is using a prototype SIMPLE IRA plan issued by a financial organization, the issue date or most recent revision date should be after April 2002. If a prototype was not updated, the employer should have contacted the appropriate financial organization and adopted an updated plan by December 31, 2006. IRA Digital Reference Manual © PMC