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).
