Each year, a SIMPLE IRA trustee must provide the employer sponsoring the SIMPLE IRA with a summary description including the following information:

1. The name and address of the employer and the trustee,

2. The requirement for eligibility for participation,

3. The benefits provided with respect to the arrangement,

4. The time and method of making elections with respect to the arrangement, and

5. The procedures for, and effect of, withdrawals (including rollovers) from the arrangement.

Because the summary description must be included with the employer notification requirements listed above, the trustee must provide this information to the employer in a timely manner. If this information is not provided to the employer, the trustee will incur a $50 penalty for each day the information is not provided unless the trustee can show reasonable cause for the failure. Considering that each employee may elect his or her own financial institution to act as trustee, each plan may have multiple trustees and, therefore, multiple summary descriptions which create further confusion.

In addition to providing information to the employer, the trustee also must provide information to participants. Within 30 days after the end of each calendar year, the SIMPLE IRA trustee must provide each individual who has an existing account with the trustee a statement showing the status of the account at the close of the year and all account activity during the year. Failure to comply with this requirement also incurs a $50 penalty for each day of noncompliance.

As you can see, 401(k) "SIMPLE"ification has come a long way.The IRS is constantly coming out with additional guidance on the new SIMPLE plans. Many of the confusing and burdensome issues will be clarified in the coming months, making the new plans even more attractive. Until then, we should consider the SIMPLE plans viable alternatives to retirement plans for smaller companies concerned with the costs and complexities of currently available retirement plan designs.