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Chapter 21. No 401(k)? No Problem! > SIMPLE 401(k) - Pg. 211

No 401(k)? No Problem! 211 Our Advice Go for the max with a SIMPLE IRA! Depending on the match option chosen by the employer and the amount the employee chooses to contribute, the combined aggregate could be as high as $11,600 for the year (2001 limit). If the employee contributes the maximum $6,500 and the employer chooses the option to match dollar for dollar up to 3 percent, this could conceivably add another $5,100 to the employee's account. Employers must make matching contributions on behalf of all eligible employees who make elective contributions. Employers also have the option to only use a 1 percent match for two out of every five years. This gives the employer some breathing space if the business has a poor year. The employer also has the option to change the contribution schedule he uses on an annual basis by making the announcement 60 days before the beginning of the plan year. There is immediate vesting of the employer's contribution, which means that it belongs to the em- ployee as soon as it is in the account. No loans or hardship withdrawals are allowed, but you know the drill by now: Withdrawals taken before the age of 59½ are subject to the 10 percent penalty. Remember, we mentioned that those fellows in Washington really want you to be responsible for your own retirement savings, and they offer lots of carrots as inducement. However, they also wield a big stick to make you toe the line. Well, here they go with that stick: Any withdrawals made within