American Funds is a respected provider of SIMPLE IRAs, a tax-deferred retirement plan solution designed specifically for small businesses.

Establishment and funding deadlines

• Plan establishment - SIMPLE plans must be established by October 1 of the current calendar year provided a SIMPLE IRA was not previously maintained (exceptions may apply for new employers). However, there is no specific deadline by which American Funds must receive the SIMPLE Adoption Agreement, application and/or check. The plan can be established as long as the employer signed the adoption agreement on or before October 1 of the applicable year.
• Funding 
  • Participant deferrals: The employer must deposit the elective deferrals into each participant’s SIMPLE IRA as of the earliest date on which those contributions can reasonably be segregated from the employer’s general assets, but in no case later than the close of the 30-day period following the last day of the month in which the money was withheld. Because SIMPLE plans have fewer than 100 participants, SIMPLE IRA sponsors can take advantage of the 7-day safe harbor rule. This rule allows them to meet plan asset rules if they deposit employee contributions to the plan’s trust account within 7 business days of being withheld from employee paychecks. If employers don’t meet the safe harbor, however, they must comply with the 30-day rule.
  • Employer contributions: The employer’s tax filing deadline (including extensions).

Making investments

• Employers are required to submit investments online, which simplifies the contribution process.
• Participants can monitor their investments and make exchanges at any time online or by phone.
• The participant controls the distributions.

Aggregating accounts (does not apply to SIMPLE IRA Plus)

Aggregation of participant IRA accounts under a SIMPLE IRA plan depends on the plan agreement selected by the plan sponsor. When a plan sponsor signs an American Funds prototype agreement, all plan contributions are required to come to American Funds. When a sponsor selects another prototype of an IRA Model Agreement, some of the contributions may come to American Funds, but the participants are not required to establish an account with American Funds. As a result, accounts will be aggregated as follows:

• Using the American Funds prototype SIMPLE IRA plan agreement will cause the participant account values to be aggregated for reduced sales charges on Class A shares. When the group assets reach a breakpoint, all plan participants benefit from the reduced sales charge. Participants’ accounts will not be linked with personal accounts.
• When the plan sponsor does not use an AFD prototype agreement for the plan, the participants’ accounts will be linked to any other personal accounts they may have with American Funds. This plan may be advantageous for participants already invested in American Funds or those who plan to establish personal accounts in the future.

For help creating an investment mix tailored to your financial goals, contact your financial professional.