Matching Options for the Simple IRA

A simple IRA is a retirement account that allows employers and employees to contribute money. With this type of account, the employer has two different options when it comes to making contributions. Here are the different options for employer contributions and how they affect employees.

Elective Match

The first option that the employer has is to do an elective match. With this option, the employer can decide whether to match what the employees put in their accounts. With this option, the employer has to match the employee contribution on a dollar-for-dollar basis. The employer can choose to contribute as much as 3 percent of the employee's salary for the year. This option provides the most possible contribution for the employees.

Non-Elective Match

Another option that the employer has is to contribute money on a non-elective basis. With this option, they will contribute a mandatory 2 percent of each employee's salary for the year. With this option, an employee can accumulate money in his or her account regardless of what he or she contributes to the account.


The employer gets the benefit of deducting the contributions from the company's taxable income. The employee gets free retirement money to invest in an effort to earn even more money.

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