Updated October 19, 2026. Quick answer: Form 5304-SIMPLE is the IRS model plan document an employer uses to set up a SIMPLE IRA plan in which each eligible employee chooses the financial institution. The form prints a 3% match limit or a 2% nonelective alternative, and it says not to file it with the IRS.
What Form 5304-SIMPLE is for
The instructions define the form this way: “Form 5304-SIMPLE is a model Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) plan document that an employer may use to establish a SIMPLE IRA plan described in section 408(p)”, “under which each eligible employee is permitted to select the financial institution for his or her SIMPLE IRA.”
The form is a model, not the only route: “A SIMPLE IRA plan may be established by using this Model Form or any other document that satisfies the statutory requirements.” The form also warns that “The SIMPLE IRA plan is a legal document with important tax consequences for you and your employees.”
Which employers may use a SIMPLE IRA plan
The form sets two requirements, and both must be met. “To establish and maintain a SIMPLE IRA plan, you must meet both of the following requirements:”
The first is size: “Last calendar year, you had no more than 100 employees” who earned $5,000 or more in compensation, counting self-employed individuals. If the limit is later exceeded, the form says “you will be treated as meeting the limit for the 2 years following the calendar year in which you last satisfied the limit.”
The second is a one-plan rule: “You do not maintain during any part of the calendar year another qualified plan with respect to which contributions are made, or benefits are accrued, for service in the calendar year.”
When not to use this form
The instructions name three cases where another document is needed. “Do not use Form 5304-SIMPLE if:”
First, an employer that wants contributions to go to one chosen institution: “You want to require that all SIMPLE IRA plan contributions initially go to a financial institution designated by you.” The form says to use Form 5305-SIMPLE in that case. Second, “You want to establish a SIMPLE 401(k) plan.”
Eligibility, elections and contributions
Employees have a minimum entitlement under the instructions: “you must permit salary reduction contributions to be made by all of your employees who are reasonably expected to receive at least $5,000 in compensation from you during the year”. The employer can widen eligibility with Article I, item 1a (full eligibility) or item 1b (limited eligibility).
For the amount an employee can defer, the form prints a 2012 figure and says it can change: “The applicable amount is $11,500 for 2012.” “After 2012, the $11,500 amount may be increased for cost-of-living adjustments.”
For the employer side, the form says “In general, you must contribute a matching contribution to each eligible employee’s SIMPLE IRA equal to the employee’s salary reduction contributions.” “This matching contribution cannot exceed 3% of the employee’s compensation.” The alternative is stated as “Instead of making a matching contribution, you may, for any year, make a nonelective contribution equal to 2% of compensation for each eligible employee who has at least $5,000 in compensation for the year.”
| Item | As printed on the form |
|---|---|
| Employer size test | “Last calendar year, you had no more than 100 employees” |
| Pay threshold for eligibility | “employees who are reasonably expected to receive at least $5,000 in compensation from you during the year” |
| Election window | “an eligible employee may make or modify a salary reduction election during the 60-day period immediately preceding January 1 of that year” |
| Matching limit | “equal to the employee’s salary reduction contributions up to a limit of 3% of the employee’s compensation for the calendar year” |
| Lowest reduced match | “The limit is not reduced below 1%” |
| Nonelective alternative | “the Employer may make nonelective contributions equal to 2% of compensation for the calendar year” |
| Compensation cap for nonelective | “No more than $250,000* in compensation can be taken into account” |
| Salary reduction deadline | “no later than 30 days after the end of the month in which the money is withheld from the employee’s pay” |
| Early distribution tax | “this additional tax is increased from 10% to 25%.” |
| Notice penalty | “you will be liable for a penalty of $50 per day until the notification is provided.” |
Notices and the effective date
Employees must be told in advance. “You must notify each eligible employee prior to the employee’s 60-day election period described above that he or she can make or change salary reduction elections and select the financial institution”. The notice has to say which employer contribution applies, and the form supplies a model notice on page 3.
On the plan start date, the form says “You must insert January 1 of the applicable year unless this is the first year for which you are adopting any SIMPLE IRA plan.” “you may insert any date between January 1 and October 1, inclusive of the applicable year.”
Parts of the form, as printed
The form runs about six pages: the plan articles, two model documents and the instructions.
| Part | As printed on the form |
|---|---|
| Article I | “Employee Eligibility Requirements” |
| Article II | “Salary Reduction Agreements” |
| Article III | “Contributions” |
| Article IV | “Other Requirements and Provisions” |
| Article V | “Definitions” |
| Article VI | “Procedures for Withdrawals” |
| Article VII | “Effective Date” |
| Page 3 | “Model Notification to Eligible Employees” and “Model Salary Reduction Agreement” |
Is it filed, and what reporting remains
The form says “Do not file Form 5304-SIMPLE with the IRS.” “Instead, keep it with your records.”
It also says “You are not required to file any annual information returns for your SIMPLE IRA plan, such as Form 5500”. Wage reporting still applies: “you must report to the IRS which eligible employees are active participants in the SIMPLE IRA plan and the amount of your employees’ salary reduction contributions to the SIMPLE IRA plan on Form W-2.”
For the government’s own pages, see the IRS SIMPLE IRA plan page and the Publication 560 page. The form itself points to Pub. 560 and Pub. 590.
Which revision applies
The edition read for this page is Form 5304-SIMPLE (Rev. March 2012), which is the revision irs.gov served when it was read on 2026-10-19. Check the revision printed on the form you are adopting, because a later revision can change the article wording, the dollar amounts marked as 2012 amounts and the instructions.
Common mistakes
- Sending the signed plan to the IRS. The form says “Do not file Form 5304-SIMPLE with the IRS.”
- Choosing this form while steering all contributions to one institution. The form says to skip it if “You want to require that all SIMPLE IRA plan contributions initially go to a financial institution designated by you.”
- Reading the 2012 dollar amounts as permanent. The form notes “This is the amount for 2012.”
- Skipping the employee notice. The form says “you will be liable for a penalty of $50 per day until the notification is provided.”
Related: SIMPLE IRA contribution limit, Form 5305-SEP, and SEP IRA contribution limit.
Sources
- Form 5304-SIMPLE (Rev. March 2012), SIMPLE Individual Retirement Account Plan (Not for Use With a Designated Financial Institution): https://www.irs.gov/pub/irs-pdf/f5304sim.pdf
Read from the agency documents linked above on October 19, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.