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The Simple (IRA) Way

What is a Simple IRA?  If you’re a business owner, you may have already heard this term before.  A Simple IRA is a retirement plan allowed for by the tax code for businesses that has some added benefits over the IRAs available to individuals.  Anyone who does not have a retirement plan set up through an employer may contribute $5,500 to either a Roth IRA or a Traditional IRA (see this article for details on both types).

A Simple IRA can be set up for almost any business with less than 100 employees, and it has the following benefits and stipulations:

Basically a Simple IRA is in between a full blow 401k and the IRAs available to individuals.  It allows for more to be contributed than the normal IRAs (12,500 vs. 5,500) but less than a 401k (12,500 vs, 18,500).  A Simple IRA does not have the stringent filing requirements of a 401k plan, hence the “Simple” name.

Overall the Simple IRA provides employers with a great way to provide retirement benefits without the hassle or large expense of setting up a 401k.  If you are interested in setting up a Simple IRA, contact a Financial Advisor that specializes in retirement plans or check out some of the options provided online.  Here is a link to the Vanguard Simple IRA page.

 

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