| SIMPLE IRA
Plan
SIMPLE stands for Savings Incentive
Match Plan for Employees. It's a payroll deduction plan
that permits an employee to make pre-tax salary deferral
contributions in addition to the employer's contribution.
Key Benefits of a SIMPLE IRA
Plan:
- Inexpensive 401(k)-type plan for the small
business owner.
- No 401(k)-type discrimination testing.
- Deductible employer contributions are made
directly to employees' IRAs.
- Employer has the flexibility to choose between
two contribution options.
- Employer contributions are mandatory.
- All contributions must be 100% immediately
vested.
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Who Can Establish:
- Self-employed Persons
- Partnerships
- S-corporations
- C-corporations
-
Non-profit, Tax-exempt,
and Governmental entities with 100 or fewer
employees. Generally, the employer may not
maintain another plan.
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Annual Contributions:
-
Who contributes: employee
and employer.
-
Employees can defer up
to: $9,000 ($10,500 if age 50 or older).
-
Employer must choose
one of two options:
-
Match employee's contribution
dollar for dollar, up to 3% of compensation
(not exceeding $9,000 or $10,500 if age
50 or older). In two years of any five year
period, the match can be reduced to 1% of
compensation.
-
Contribute 2% of each
eligible employee's compensation (compensation
is limited to $205,000.)
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SIMPLE IRA Candidates:
- An employer who wants a retirement plan
that is easy to establish and maintain and
has minimal costs.
- Employers that may not be able to afford
the costs of maintaining a Profit Sharing
or 401(k).
- An employer who wishes to establish a plan
where there is an employee contribution component.
- Self-employed individuals who could defer
a larger percentage of their compensation
inside a Simple IRA vs. a SEP due to the Simple
flat dollar contribution limit.
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Contact a UVEST Investment
Consultant to go over your options for retirement.
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