Questions: True or False: A SIMPLE IRA allows the employer to contribute up to 25% of earnings into your IRA account.

True or False: A SIMPLE IRA allows the employer to contribute up to 25% of earnings into your IRA account.
Transcript text: True or False: A SIMPLE IRA allows the employer to contribute up to $25 \%$ of earnings into your IRA account.
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Solution

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The answer is False.

Explanation: A SIMPLE IRA (Savings Incentive Match Plan for Employees Individual Retirement Account) allows employers to make contributions to their employees' retirement savings. However, the contribution limits are not up to 25% of earnings. Instead, employers can either:

  1. Match employee contributions dollar-for-dollar up to 3% of the employee's compensation, or
  2. Make a non-elective contribution of 2% of the employee's compensation, regardless of whether the employee contributes.

Therefore, the statement that a SIMPLE IRA allows the employer to contribute up to 25% of earnings into your IRA account is incorrect.

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