IRS Form 5304-SIMPLE

Fill out
Export or Print
Download your fillable IRS Form 5304-SIMPLE in  PDF
IRS Form 5304-SIMPLE

Each individual begins to think about aging at some point, and these thoughts obviously come along with financial planning. One of the options an employer may choose to help their employees is to establish and maintain a SIMPLE IRA plan, which will allow the latter to save a certain amount of money. This money is tax-deferred until taken out. Once a person wishes to retire and get the sum, they will have to pay income taxes.

However, not all employers may choose to use this plan. To establish one, you have to show that not more than 100 staff members (including individual entrepreneurs) were a part of your team, and their income in compensation has been at least $5,000. The other requirement is that you have not maintained any other qualified retirement plan during the calendar year. Both of these should be proved for you to be allowed to adopt a SIMPLE IRA plan.

When Should Not I Use This Form?

If you wish the contribution to be transmitted to a certain financial organization that you choose, want to adopt a SIMPLE 401(k) plan, or intend to establish the plan for the ineligible nonresident aliens, please do not initiate creating this document.

Reporting Requirements

There is no obligation for the work provider to report annual information returns. However, you should inform the IRS which of your staff members are active participants of the plan and how much money has been reduced from their salary as a retirement contribution.

When Must the Employer Make the Contributions?

The money is put aside monthly, not later than on the 30th day. According to the law, you cannot choose the financial institution that will keep and operate the employees’ contributions — those who work for you make this choice themselves.

Other IRS Forms for Business

Here are some other business forms that small employers might need to use to report financial information to the IRS.

How to Fill Out the Form

The IRS recommends using the help of a legal assistant due to the fact that the paper is relatively complicated to complete properly. However, if you are sure that you will be able to successfully fill it out yourself, you may choose to use our form-building software and create a personalized IRS Form 5304-SIMPLE online.

Provide the Name of the Company

step 1 provide the name of the company filling out irs form 5304 simple

You will have to input the name of your organization on the very first line.

Choose the Eligibility Requirements

step 2 choose the eligibility requirements filling out irs form 5304 simple

Choose the type of eligibility, depending on whether all of your employees can legally participate in the plan or not.

Indicate Whether There Are Excludable Employees

step 3 indicate whether there are excludable employees filling out irs form 5304 simple

Check the box if relevant.

Extend the Period for Modifying the Contributions

step 4 extend the period for modifying the contributions filling out irs form 5304 simple

Normally, the employee has the right to make or modify a salary reduction election not later than 60 days after the first day of the calendar year (or after becoming eligible). However, you may alter this period and indicate the one you consider appropriate.

Prohibit the Employee to Terminate a Salary Reduction Election at any Time

step 5 prohibit the employee to terminate a salary reduction election at any time filling out irs form 5304 simple

If you check the box, you will not permit those employees who have terminated a salary reduction election at the time other than indicated above to continue to receive contributions during the year. Leave it blank in case you consider this acceptable.

Indicate Contributions Amount

step 6 indicate contributions amount filling out irs form 5304 simple

According to the law, when you stick to a SIMPLE IRA plan, you have to contribute certain amounts of money to an organization chosen by the person who works for you. This amount has to be not more than 3% of the employee’s compensation but cannot be less than 1%. Normally, the sum is $5,000 or less (insert the exact amount of contribution on line 2b(i)).

Look Into Additional Provisions

step 7 look into additional provisions filling out irs form 5304 simple

This part of the document consists of some more details you should study before signing the form.

Study the Definitions

step 8 study the definitions filling out irs form 5304 simple

Make sure you understand the terms shown in Section 5, including the following:

  • The money you pay your staff members as a work provider, which is subject to federal income tax.
  • Compensation for Self-Employed Individuals. The net income an individual entrepreneur receives from their self-employment.
  • The person is residing on the territory of the US and legally working for you as a work provider.
  • SIMPLE IRA. An individual account is created for keeping the contributions.

Date the Paper

step 9 date the paper filling out irs form 5304 simple

The provisions of this document will gain validity on the date you select to insert herein. Write your name, residential address, title, and append the signature.

Enter the Company Name

step 10 enter the company name filling out irs form 5304 simple

The third page of this form begins by identifying the entity, which is about to set up the plan.

Specify the Year

step 11 specify the year filling out irs form 5304 simple

Then, write down the appropriate year. If you fill the form out not for the first time, enter the first day and month of the calendar year. In other cases, insert a date between January and October.

Choose the Contribution Election

step 12 choose the contribution election filling out irs form 5304 simple

Choose among three options and check the corresponding box. You will also need to indicate the percentage of a matching contribution if you check the second type or a certain amount of annual contribution the staff member is supposed to receive.

Inform Employees about a Written Agreement

step 13 inform employees about a written agreement filling out irs form 5304 simple

Complete the line with a name of a company or its representative who is responsible for getting the notice back from the employee. Do not forget to enter the due date for this paper to be delivered (which cannot be less than 60 days).

Agree Upon Salary Reduction

step 14 agree upon salary reduction filling out irs form 5304 simple

This part of the paper should be completed by the employee. First, indicate the entity name and the type of retirement contribution you consider appropriate.

Specify the Date Your Plan Will Start to Work

step 15 specify the date your plan will start to work filling out irs form 5304 simple

The salary reductions will start once all the paperwork is ready. However, you have an opportunity to indicate a particular date, which, however, should not be before the agreement is signed and considered effective.

Designate a Financial Institution

step 16 designate a financial institution filling out irs form 5304 simple

Provide the name of an organization that will deal with your contributions. Insert the address and the data concerning your account as well. This institution is responsible for providing the employer with summary descriptions every year.

Append the Signature

step 17 append the signature filling out irs form 5304 simple

By signing and dating the paper, you confirm to have agreed upon the conditions. This document will terminate any agreement that has been made prior to the current one. You possess the right to stop participating in the plan under the requirements shown in this form.

The IRS takes care of how simple it is for the individuals living on the territory of the US to complete tax forms. They estimate preparing this one rather time-consuming — a person might spend more than three hours recordkeeping, more than two and a half hours studying relevant laws, and 47 minutes filling inapplicable data. In case you are ready to suggest how to improve and simplify the paper, contact the Tax Products Coordinating Committee.

Remember that this form does not have to be filed. Consult a legal professional and keep it for your records instead.