Simple IRA | Good For My Business?

Planning for your retirement can be a heck of a lot easier with the help of an IRA plan. There are several different forms of IRA plans currently being used by consumers today, among the more popular are traditional and Roth IRAs. However, one of the more popular in recent days has been Simple IRAs. This plan stands for the acronym Savings Incentive Match Plan for Employees. This is a simplified plan so most of the administrative and continual costs are lower and it is the accepted IRA by employers who do not administer any other form of retirement plan for their employees. Many small business owners let the Simple IRA plan be an option for their workers who want to save for retirement and they will often match contributions to their accounts. Who can have Simple IRAs? The reason why not as many people have these IRA plans is because they are a little more restrictive on who can have them. In order to have a Simple IRA plan you must either 1) Have a small business with less then 100 workers 2) Have been denied any other retirement plan based on qualifications or 3) Want an easy, less complicated way to start your retirement savings. Simple IRAs come attached with several advantages that other retirement plans cannot compete with. Here’s the run- down:

  • They are easy to run! Not only are they easy to run, they are incredibly easy to set up and you don’t necessarily have to have a broker to do all the ‘dirty’ work for you because there isn’t any ‘dirty’ work to get done!
  • If you are a small business owner you can ask your employees to contribute to their accounts through deductions in their pay checks. They don’t have to do extra work and it makes saving easier for you and them.
  • It doesn’t cost much to set up or run one of the Simple IRA plans.
  • You have the option of matching employee contributions by percentage or by how much they put in.
You see, under the rules of the Simple IRA, you, as the employer make contributions depending on individual employee IRAs. While the employee has full ownership of their Simple IRA account, it is actually run by both you and the employee. The only negative that comes up when looking into a Simple IRA plan is that they often come with stiffer contribution limits. This is usually set up to protect the employer from having to front to much cash on a yearly basis. Simple IRA plans come with their limits set by the IRS and are not generally the same as other IRA plans.