Maximum Compensation Used for Figuring Contribution Limits

The maximum compensation used for figuring contribution limits and benefits for 2012 is $250,000 ($245,000 for 2011).


Employee compensation is the total wages, tips, and other compensation subject to federal income tax withholding and employee's salary reduction contributions made under the plan.

Self-Employed Persons:

If you're self-employed, compensation is your net earning from self-employment (line 4, Section A, or line 6, Section B, of Schedule SE) before subtracting any contributions made to the SIMPLE IRA for yourself.

Time Limit for Employer to Deposit Salary Reduction Contributions

The employer must make salary reduction contributions to the employee's SIMPLE IRA within 30 days after the end of the month in which the amount would have otherwise been payable to the employee in cash.

You, as the employer, must make your matching contributions or nonelective contributions on behalf of the employee by the due date (including extensions) for filing your federal income tax return for the year.

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