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Tech Talk: Forms to Use in Establishing a SIMPLE IRA

Q: If you are helping an employer with 10 employees establish a SIMPLE IRA, which forms do you use, and do the forms need to be filed with the IRS?

A: There are two IRS forms which would be used by the employer (but there is no need to file them with the IRS), which should maintain the proper form in its records:

1. Form 5304 if employees are permitted to select their own financial institution to receive the contributions; or

2. Form 5305 if the employer is designating the financial institution to receive the contributions.

The forms are also used to provide information about the plan to each employee and must be given to each employee.

Special note: The SIMPLE IRA must be established by Oct. 1.