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.

Advantages:

– 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take before-tax contributions out of their retirement plans, that money is subject to ordinary income tax and, if withdrawn before age 59 ½ , may be subject to an additional 10% federal tax penalty (25% penalty if withdrawn from a SIMPLE IRA within the first two years).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.