Looking for a retirement plan for your small business, both for you and your employees? Well, here’s a SIMPLE one. A SIMPLE (Savings Incentive Match Plan for Employees of Small Employers) IRA plan offers great advantages for businesses that meet two basic criteria.
- Must have 100 or fewer employees (who earned $5,000 or more during the preceding calendar year).
- Cannot currently have another retirement plan in place.
If you are among the thousands of business owners eligible for a SIMPLE IRA plan, you should investigate further.
Here’s why SIMPLE could be your best choice for retirement
A SIMPLE IRA provides employers and their employees with a simplified way to contribute toward retirement. It reduces taxes and, at the same time, attracts and retains quality employees. And, compared to other types of retirement plans, a SIMPLE IRA offers lower start-up and annual costs … they are just simpler to operate.
Other Advantages of a SIMPLE IRA Plan:
- SIMPLE IRA plans are easy to set up and run – your financial institution handles most of the details.
- Employees can contribute, on a tax-deferred basis, through convenient payroll deductions.
- You can choose either to match the employee contributions of those who decide to participate or to contribute a fixed percentage of all eligible employees’ pay.
- You may be eligible for a tax credit of up to $500 per year for the first 3 years (IRS Form 8881, Credit for Small Employer Pension Plan Startup Costs).
- Administrative costs are low.
- You are not required to file annual financial reports.
Want to know more? U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) and the Internal Revenue Service published an easy to understand explanation. You can go here and download a PDF.