Mid Year start for SIMPLE IRA; full yr comp?

[Guest ButchElfers]

If you start up a Simple in mid year (July 1), do you have to use compensation for the full year? or can you just use the half years comp?

For example, if you have an individual who earns $10k the first six mo's and $10k the second six mo's, and the Simple is started 7/1...if that person defers 6% that equals $600 for the year. should the employer match up to 3% of $10,000 or 3% of $20,000? thanks for your help

[Gary Lesser]

Notice 94-4 provides that compensation "for the entire calendar year" is used. That language strongly suggests that no proration is allowed.

[Guest ButchElfers]

thanks for all of the good info!!!