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A simple retirement plan for small businesses

Small businesses are the backbone of our economy. Yet, there is something that both employers and employees miss out on: a small business retirement plan.


If you own a small business but you haven't yet started a retirement plan, this is your chance. No, this isn't a big, expensive 401k plan for your small business that requires hours and headaches about record-keeping and compliance. This is a simple retirement plan that is super easy to manage and has great tax advantages. It's ironically called a SIMPLE IRA.


Here's how it works

A SIMPLE IRA (Savings Incentive Match for Employees) is simply a retirement account that is set up by each employee, just like a regular IRA. Each account is separate, not pooled together like some 401k plans. That means all contributions are vested and each employee can invest on their own or with the help of an advisor. It's like a personal business retirement plan for each employee. Here's some benefits and requirements:

  • Small business owners with up to 100 employees are eligible.

  • Employer contributions are tax-deductible.

  • Employee contributions grow tax-deferred.

  • No employer IRS tax filing requirements.

  • No set up fees or account maintenance fees (if set up through TD Ameritrade)

Employees may contribute up to $13,000 per year in salary deferrals or $16,000 if age 50 and up for 2019. This is over twice the limit of a standard IRA.


Employers must make contributions in one of two ways: a 3% match of employee salary, with the option to reduce it to 1% in two out of five years; or, a standard 2% match for all employees, regardless of employee contribution.


This type of retirement plan is great for the employer and the employee with very minimal set up and maintenance requirements.


Here's a SIMPLE IRA Guide to download that will help answer more questions. You can also check out the IRS website here for more info and details.


We're always available to help small business owners and employees set up SIMPLE IRAs so give us a call to start or revamp your plan!

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