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Form 5305-SIM: 5305-SIMPLE
IRS Form 5305-SIMPLE is a model Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) plan document used to establish a SIMPLE IRA plan. It details eligibility requirements, such as requiring employees to receive at least $X in compensation.
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IRS Form 5305-SIM - 5305-SIMPLE
IRS Form 5305-SIMPLE is a model Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) plan document used to establish a SIMPLE IRA plan. It details eligibility requirements, such as requiring employees to receive at least $X in compensation.
Risk Radar
Scan points- 1Do not file Form 5305-SIMPLE with the IRS; it must be kept only with your records.
- 2Filing Form 5305-SIMPLE with the IRS instead of keeping it with your records.
- 3Not providing employee notification before the 60-day election period for contributions.
- 4Calculating matching contributions above the specified 3% compensation limit.
- 5Using a contribution amount higher than the applicable annual limitation (e.g., $11,500 for 2012).
Plain English
This form helps an employer set up a retirement savings plan for their small business staff. It outlines the rules for how the company will contribute money into its employees' individual retirement accounts (SIMPLE IRAs). By completing this document, the employer formalizes the matching or nonelective contributions to ensure that all eligible workers can save for their future.
Submission Date
- Filing date: 2012-08-06 00:00:00
- Preparation window: collect IDs, supporting records, and signatures in advance.
- Final review: verify names, dates, and required fields before submission.
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Glossary Terms
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What this form is for
- Use this form when establishing a SIMPLE IRA plan under section 408(p) of the Internal Revenue Code and utilizing a designated financial institution.
- Do not use it when wanting to permit each eligible employee to choose a different financial institution for receiving contributions, or if setting up a SIMPLE 401(k).
- Check Form 5304-SIMPLE instead when employers do not want to use a designated financial institution.
Form selector
Use this form or another form?
Employer wishes employees to choose their own financial institution
The alternative form allows employees to select multiple receiving institutions, bypassing the requirement for a single designated custodian.
✓ Confirm if employee selection flexibility is required before using this document.
Establishing a SIMPLE plan for nonresident aliens with no US earned income
This model was designed under rules requiring US-sourced compensation and eligibility status.
✓ Verify residency requirements of all involved employees.
N/A (No specific alternative listed)
Plan structure must be a SIMPLE 401(k) rather than an IRA
The form specifically establishes contributions into a SIMPLE individual retirement account or annuity, not a 401(k).
✓ Confirm the intended plan type before finalizing documentation.
N/A (No specific alternative listed)
Deadline or filing window
The employer must report salary reduction contributions and identify active participants to the IRS on Form W-2. Contributions are deductible in the tax year containing the end of the calendar year for which they are made, provided they are deposited by the due date (including extensions) of the income tax return for that year.
Checklist
What you need before filling it out
Establishing Plan Purpose
Use Form 5305-SIMPLE under section 408(p) · Form p.1, p.4 (Introductory material)
Employee Contribution Rules
Must complete Article I by selecting Full Eligibility or Nonelective Contributions. · Form p.1, Article I
Designated Institution Details
Requires name, address, signature, and title for the financial institution. · Form p.2 (Article VII)
Plan Filing Protocol
The form is a model document to keep with records; it must not be filed with the Internal Revenue Service. · Form p.4, General Instructions
Operative Provisions
Pages 1 and 2 of Form 5305-SIMPLE contain the binding operational provisions of the SIMPLE IRA plan. · Form p.4
Before you submit
- 1Confirm that all appropriate boxes and blanks on Pages 1 and 2 are completed.
- 2Establish if employees qualify for Full Eligibility or if Nonelective Contributions apply under Article I.
- 3If using nonelective contributions, verify employee compensation meets the minimum requirement of at least $X in compensation.
- 4Confirm that if electing 2% nonelective contributions instead of matching contributions, notification was provided within a reasonable time before the employees’ 60-day election period for the calendar year.
- 5Have the designated financial institution accurately completed its name, address, and required signatures on Article VII.
- 6Ensure both the employer and the designated financial institution execute the document by signing and dating it.
- 7File all documentation with internal company records to maintain a legal record of the plan adoption.
How to file this form
- 1Complete all operative provisions and appropriate blanks found on Pages 1 and 2 of Form 5305-SIMPLE.
- 2Obtain execution signatures from both the employer representative and the designated financial institution using Article VII.
- 3Review the entire document to ensure all required articles, including eligibility criteria, are addressed in full.
- 4Keep the fully signed and executed form with your business records as evidence of establishing the SIMPLE IRA plan.
Known limitations
- 1The form 5305-SIMPLE is not suitable if an employer wants eligible employees to choose a financial institution for initial contributions.
- 2If the employer does not want to select a designated financial institution, this form cannot be used.
- 3Special rules apply if failure to maintain the 100-employee limit or the one-plan rule described in Article I is due to an acquisition or similar transaction involving the business.
Field map
Compact field-by-field guide
General Info
2 items
Full legal name and taxpayer identification number (SSN or EIN).
Current mailing address.
Details
2 items
Complete all applicable sections of this form according to the official IRS instructions.
Enter the relevant dollar amount if this form involves tax calculation.
Certification
1 items
Read and acknowledge any certifications required by this form.
Signatures
1 items
Sign and date. Unsigned forms cannot be processed.
Almost done reviewing the fields?
Fillable formOpen in Editor->The provided form is Revision March 2012. The official source excerpts do not mention a date for the most current edition, nor do they describe any changes since this revision was printed.
What changed or needs a fresh check
- Revision date — confirm it reads March 2012.
- Filing status — confirm that the document must be kept with records and not submitted to the IRS.
- Required Signatures — ensure execution by both the employer and the designated financial institution.
- Plan Articles — note that section references are to the Internal Revenue Code unless specified otherwise.
Quick Facts
Downloads
After you file
- 1Do not file Form 5305-SIMPLE with the Internal Revenue Service; instead, keep it with your records.
- 2Retain books or records related to this form and its instructions as long as their contents may become material in the administration of any Internal Revenue law.
- 3When establishing the plan, confirm that all contributions are deposited into a SIMPLE individual retirement account or annuity established for each eligible employee at the designated financial institution named in Article VII.
- 4Keep records detailing salary reduction contributions and matching/nonelective contributions made on behalf of employees.
Sources
- SRCForm p.4 — The purpose of Form 5305-SIMPLE is a model Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) plan document.
- SRCForm p.1 — Name of Employer establishes the SIMPLE IRA plan under section 408(p) of the Internal Revenue Code and pursuant to the instructions contained in this form.
- SRCForm p.6 — Books or records relating to a form must be retained as long as their contents may become material in the administration of any Internal Revenue law.
- SRCForm p.4 — Do not file Form 5305-SIMPLE with the IRS; instead, keep it with your records.
- SRCForm p.1 — The Employer agrees to permit salary reduction contributions to be made in each calendar year for employees meeting eligibility requirements.
- SRCForm p.6 — A designated financial institution must be a trustee, custodian, or insurance company that issues annuity contracts and is required to receive all contributions.
Common confusion points
Where do I physically file Form 5305-SIMPLE?
The form is a model plan document, not a filing submission.
→ Do not send this form to the IRS; instead, keep it for your records.
What must I do if I choose a designated financial institution?
Selecting an institution is mandatory if using this specific form.
→ The designated financial institution must be a trustee, custodian, or insurance company that issues annuity contracts and can receive all contributions.
Is Form 5305-SIMPLE the only way to establish a SIMPLE IRA?
The form is described as a model document.
→ A SIMPLE IRA plan may be established using this Model Form or any other document that satisfies statutory requirements.
What constitutes a 'qualified plan' for size limits?
Understanding the rules governing business changes is complex.
→ A qualified plan includes a qualified pension plan, profit-sharing plan, stock bonus plan, qualified annuity plan, tax-sheltered annuity plan, and simplified employee pension (SEP) plan.
Workflow map
Related forms and next steps
Before
Current
After
Often used with
⚠ If something goes wrong
- Special rules apply if failure to satisfy the 100-employee limit or one-plan rule is due to an acquisition involving the business.
Questions about IRS Form 5305-SIM
What is IRS Form 5305-SIM used for?
This form helps an employer set up a retirement savings plan for their small business staff. It outlines the rules for how the company will contribute money into its employees' individual retirement accounts (SIMPLE IRAs). By completing this document, the employer formalizes the matching or nonelective contributions to ensure that all eligible workers can save for their future.
Who must file IRS Form 5305-SIM?
Employers establishing a SIMPLE IRA plan must use this model form. The source does not specify other required filer categories.
What information does IRS Form 5305-SIM require?
The form outlines employee eligibility requirements, which depend on both current and prior compensation. It details the employer’s contribution options: Matching Contributions (up to 3% of salary reduction) or Nonelective Contributions (2% of compensation).
When is IRS Form 5305-SIM due?
Contributions are treated as made for a particular tax year if they are made by the due date, including extensions, of your income tax return for that year. Eligible employees may make or modify a salary reduction election during the 60-day period immediately preceding January 1 of that year.
Where do I file IRS Form 5305-SIM?
Do not file Form 5305-SIMPLE with the IRS; instead, keep it with your records. The form is intended to be used in conjunction with SIMPLE IRAs established at a designated financial institution.
How do I complete IRS Form 5305-SIM?
The employer must first determine if employees meet eligibility requirements based on compensation levels. Next, the employer elects between Matching Contributions or Nonelective Contributions; if electing nonelective funds, they may use up to $250,000 in compensation for that calculation. Finally, the plan requires notification of the chosen contribution method before the employee's 60-day election period.
What happens if IRS Form 5305-SIM is filed incorrectly?
The source does not specify penalties for incorrect completion of the form. However, all contributions made under this plan are subject to social security, Medicare, railroad retirement, and federal unemployment tax.
Where do I physically file Form 5305-SIMPLE?
The form is a model plan document, not a filing submission. Do not send this form to the IRS; instead, keep it for your records.
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