Understanding What Forms
Are Needed to Establish a
SIMPLE IRA Plan And a SIMPLE
In order to establish its SIMPLE IRA
plan, a sponsoring employer must execute
either the IRS Model Form 5304-SIMPLE or the Form 5305-SIMPLE.
Each eligible employee must establish
his/her own SIMPLE IRA to receive elective
deferrals and the employer’s matching
or non-elective contribution. The IRS
has two model forms for this - a Form
5305-S (trust) and a Form 5305-SA (custodial).
CWF Form 941 uses/incorporates Form
5305-S. CWF Forms 940 and 942
use/incorporates the custodial version,
These two forms do not discuss or reference
what form the employer completed
in order to establish its SIMPLE IRA
plan. These forms authorize the trustee or
the custodian to accept contributions
made on behalf of a participant under
the employer’s SIMPLE IRA plan.
Some IRA representatives are confused
because the IRS does not have a 5304
version for an individual to establish
his/her SIMPLE IRA.
One can see a person thinking the IRS
might have another 5304 SIMPLE IRA
form to be used by the individual, but
this form has not been written by the IRS
as the IRS does not think it is needed.