IRS Announces Second Model
Simple Retirement Plan

WASHINGTON - The Internal Revenue Service today announced the release of Form 5304-SIMPLE (Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) - Not Subject to the Designated Financial Institution Rules).

The Small Business Job Protection Act of 1996 created SIMPLE retirement plans under which small employers make contributions to individual retirement accounts or annuities (SIMPLE IRAs) established for employees. Form 5304-SIMPLE is a model SIMPLE plan for use by employers who permit plan participants to select the financial institutions at which the participants' SIMPLE IRAs are established. Form 5304-SIMPLE generally parallels the previously released Form 5305-SIMPLE, a model SIMPLE plan for use by employers who require all contributions to be made to SIMPLE IRAs for participants established at a designated financial institution.

Form 5304-SIMPLE, like Form 5305-SIMPLE, provides small employers with an easy way to adopt a SIMPLE Plan by using a model plan document, notification to employees, and salary reduction agreement. For the 1997 calendar year, model SIMPLE plans using either Form 5304-SIMPLE or Form 5305-SIMPLE can be made effective as late as October 1, 1997. Form 5304-SIMPLE will be available on the IRS Web site by the end of the week.

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