DESIGNATED FINANCIAL INSTITUTION "DFI. In general, under section 408(p), an employer must permit an employee to select the financial institution for the SIMPLE IRA to which the employer will make all contributions on behalf of the employee. In this case, the financial institution is referred to as a "Non-DFI". Alternatively, under section 408(p)(7), an employer may require that all SIMPLE contributions initially be made to a single designated financial institution selected by the employer. In this case, the financial institution is referred to as a "DFI". Refer to your employer's SIMPLE Retirement Plan document to determine if the financial institution is a DFI or a Non-DFI. Use of a Designated Financial Institution "DFI" - If an employer requires that all SIMPLE contributions initially be made to a DFI, the following requirements must be met:
DESIGNATED FINANCIAL INSTITUTION "DFI. In general, under section 408(p), an employer must permit an employee to select the financial insti- tution for the SIMPLE IRA to which the employer will make all contributions on behalf of the employee. In this case, the financial institution is referred to as a “Non- DFI”. Alternatively, under section 408(p)(7), an employer may require that all SIMPLE contributions initially be made to a single designated financial institution selected by the employer. In this case, the financial insti- tution is referred to as a “DFI”. Refer to your employer’s SIMPLE Retirement Plan document to determine if the financial institution is a DFI or a Non-DFI. Use of a Designated Financial Institution “DFI”—If an employer requires that all SIMPLE contributions initially be made to a DFI, the following re- quirements must be met:
DESIGNATED FINANCIAL INSTITUTION "DFI a. A Designated Financial Institution is a trustee, custodian, or insurance company (that issues annuity contracts) that receives all contribu- tions made pursuant to this SIMPLE IRA Plan and deposits those contributions to the SIMPLE IRA of each Eligible Employee. If Item 14(b) of the Adoption Agreement is checked, the Employer will designate the financial institution at which SIMPLE IRAs will be established to receive contributions for Eligible Employees. Pursuant to the provisions of section 408(p)(7) of the Code, the DFI will notify Eligible Em- ployees in writing (either separately or as part of the Plan Notice described in section 2.04 of the Plan) that their SIMPLE IRA balances may be transferred without cost or penalty to another SIMPLE IRA in accordance with the withdrawal and rollover provisions under section 408(d)(3)(G).
b. If Item 14(a) of the Adoption Agreement is checked, the Employer must permit each Eligible Employee to select the financial institution for his or her SIMPLE IRA (Non-DFI). Employer Disclosure The Savings Incentive Match Plan for Employees (“SIMPLE”) is a plan that provides you with a simplified way to enhance your employees’ retirement income. Under a SIMPLE, eligible employees may choose whether to make elective deferrals to the SIMPLE or to receive the amounts in cash. If elective deferrals are made, you contribute the amounts deferred by employees directly into a SIMPLE Individual Retire- ment Arrangement (SIMPLE IRA) set up by or on behalf of the employee with a bank, insurance company, or other qualified financial institution. The SIMPLE IRA must be one for which the Internal Revenue Service has issued a favorable opinion letter or a model SIMPLE IRA published by the Service. The information provided below is intended to assist you in understanding and administering the elective deferral provisions of your SIMPLE Retirement Plan.
I - Employers Who May Not Use This SIMPLE Plan
A. Maintains any other retirement plan including a qualified plan, SEP, SARSEP or 403(b) plan, or
B. Had more than 100 employees, who received at least $5,000, at any time during the prior plan year. (If you are a member of a controlled group of businesses, you may use this SIMPLE Plan, provided that in the prior plan year there were never more than 100 employees who received at least $5,000 for the prior plan year, in total, of all the members of such groups, trades, or businesses. In addition, all eligible employees of all the members of such gr...
