Amend a SIMPLE IRA plan

ARTICLE TAKEAWAYS

  • Examples of when a SIMPLE IRA plan may need to be amended
  • The steps required to amend a SIMPLE IRA plan

For employers with existing SIMPLE IRA plans, changes to the plan may require the plan to be amended, prior to the enrollment period for the following calendar year.

The SIMPLE IRA plan must be amended if any of the following changes:

  • Eligibility requirements
  • Adding/removing the Roth salary deferral option
  • Type of plan document used
     

The plan sponsor is responsible for preparing and distributing disclosure documents to all eligible employees prior to the enrollment period, November 2 through December 31 of the current year.

Please note the following:

  • When a SIMPLE IRA plan is amended, it will be effective January 1 of the following year
  • The Internal Revenue Service requires the current SIMPLE IRA plan to continue to operate as is for the current calendar year

How to amend an existing SIMPLE IRA plan

Step 1

The plan sponsor must:

  1. Amend their plan by completing the SIMPLE IRA Adoption Agreement located in the SIMPLE IRA Plan Sponsor Guide. Complete all relevant sections, not just those you are updating. The changes to the SIMPLE IRA plan will be effective January 1 of the following year. 
  2. Keep a copy of the adoption agreement for their records
  3. Return the completed forms to American Funds. Copies are acceptable.

Step 2

The plan sponsor must communicate the plan changes to all eligible employees prior to the November 2 start of the enrollment period by providing the following forms:
 
  1. Notification to Eligible Employees1,2
  2. Summary Description for the SIMPLE IRA Plan1,2
  3. SIMPLE IRA Salary Deferral Election1


If the plan amends to add Roth employee salary deferral contributions, the plan sponsor must also provide copies of the Roth SIMPLE IRA Custodial Agreement and Disclosure Statement to all eligible employees.

1 The plan sponsor must complete before distributing.

2 Capital Group will send the plan sponsor these documents prior to November 2. They can also be found in the SIMPLE IRA Plan Sponsor Guide.

Step 3

  1. Collect the completed Salary Deferral Elections from employees and SIMPLE IRA applications from new participants
  2. Mail the following to Capital Group:
    • Completed SIMPLE IRA application(s). If the company is paying the account setup fee(s), include a check for $10 for each new participant establishing an account.
    • If the plan offers Roth salary deferral contributions and existing participants elect to make Roth salary deferral contributions for the first time, provide this information by completing the SIMPLE IRA Roth Election for Existing Participants

Note: For SIMPLE IRA plans that offer Roth salary deferral contributions, a participant's Capital Bank and Trust Company (CB&T) SIMPLE IRA and CB&T Roth SIMPLE IRA are considered the same IRA type. Only one setup fee and one annual fee are charged for the participant.

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Related content

SIMPLE IRA
Managing SIMPLE IRAs
SIMPLE IRA sample disclosure documents

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The guidelines and procedures provided in the Account Resource Center may not apply to networked accounts or accounts not directly held by American Funds. The guidelines and procedures provided also apply only to those retirement accounts or Coverdell ESAs invested in American Funds with Capital Bank and Trust Company (CB&T) as custodian. The guidelines and procedures provided in the Account Resource Center do not apply to plans held in our retirement plan solutions — PlanPremier, PlanPremier-TPA or RecordkeeperDirect. Information on the Account Resource Center may change periodically, and previously printed information may not be current. Please refer to capitalgroup.com for the most current information available.

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