Final answer:
The statement is true, SIMPLE IRAs do not require an annual filing to the IRS, which simplifies their maintenance compared to retirement plans like 401(k)s. However, unlike Roth IRAs that have tax-free growth and no required distributions, SIMPLE IRAs do require distributions at age 72 and have maximum annual contributions.
Step-by-step explanation:
The statement that SIMPLE IRAs have no annual filing requirements is true. SIMPLE IRAs are designed to be straightforward retirement savings plans for small businesses and self-employed individuals. Unlike some other retirement plan options, they do not require an annual report to the IRS, which makes them less burdensome for employers. This feature is different when compared to other retirement accounts that often require annual reporting, such as the Form 5500 filing required for 401(k) plans.
While SIMPLE IRAs have no annual filing requirement, it's important to note differences with other retirement accounts for context. For instance, a Roth IRA offers tax-free growth and allows for tax-free withdrawals on earnings. Roth IRAs also have no required minimum distributions, while SIMPLE IRAs require distributions at age 72. Both accounts have maximum contributions per year with income phase-out rules that can affect how much you can contribute. Unlike Roth IRAs, which have no required withdrawals and allow tax-free growth, SIMPLE IRAs have certain filing requirements.
Employers who offer SIMPLE IRAs to their employees are required to file Form 5500-SF annually to report the plan's activity.