I recently set up a SIMPLE IRA plan for a business in Corvallis. Their goal was to help their employees save for retirement while not spending a small fortune on administrative costs. If this is the case for your business, you may want to take a look at a SIMPLE IRA plan.
Who is eligible: Businesses with less than 100 employees, tax-exempt organizations, and government entities.
Who must be covered: Any employee earning $5,000 during any two preceding years.
Required Employer Contribution: Dollar-for-dollar match up to 3% of pay OR 2% of gross pay up to $245,000 for all eligible participants who earn at least $5,000.
Maximum Contribution: $12,000 deferral plus a $12,000 maximum match. Those over the age of 50 may make an additional catch-up contribution of $2,500.
– Minimal paperwork and expense
– Minimal tax filing
– Participant deferral of current income taxes
Note: When participants take before-tax contributions out of their retirement plans, that money is subject to ordinary income tax and, if withdrawn before age 59 ½ , may be subject to an additional 10% federal tax penalty (25% penalty if withdrawn from a SIMPLE IRA within the first two years).
Those are the basics, but please give us a call if a SIMPLE plan seems like it may be appropriate for your business.