SIMPLE IRA Retirement Planning

Our financial planning company on Cape Cod is here to provide business owners with plenty of retirement planning options for their employees. One of the best retirement plans available for small businesses is a SIMPLE IRA. A Savings Incentive Match for Employees (SIMPLE) IRA is an employer-sponsored retirement plan that is offered by small businesses with less than 100 employees.

What is a SIMPLE IRA?

As a business owner, you want to ensure that your employee incentives include a retirement savings plan. SIMPLE IRAs have an employer matching incentive up to 3% of their salary, or you can choose to make contributions for your employees of a flat 2% of their salary, whichever you decide. The best part about a SIMPLE IRA for small businesses is that they are less expensive and significantly less complicated than the traditional 401k plan.

The SIMPLE IRA plan works very similar to the 401k plan in the sense that all contributions are made pre-tax and the money accumulates tax-deferred until the employee reaches retirement and is able to access the funds.

Why Choose SIMPLE IRA For Retirement Planning

Businesses who opt for SIMPLE IRA retirement planning are required to match anywhere from 1-3% of each of their employee's salary after a certain length of time the employee has been with the company. With a 401k, employers can choose not to match employee contributions, which can be a hot button issue in tough economic times. SIMPLA IRAs allow you (the business owner) to decide how much you want to contribute to the retirement plan as the contribution limits are different from a 401k's.

So what does this mean for the employee? Last year, employees were able to contribute up to $12,500, with a catch-up contribution limit of $3,000. Employees who have been contributing to their SIMPLA IRA plan for over two years can also easily transfer the funds to a rollover IRA account.

How Our Cape Cod Financial Planning Company Can Help

Cape Cod Wealth Strategies & Insurance Services, LLC is here to help small business owners on Cape Cod determine what the best retirement plan is for their employees and their business model. Our certified financial planners will sit with you and evaluate your budget and gross annual revenue to determine what the best SIMPLE IRA contribution limit is for your company. If you are interested in learning more about the benefits of SIMPLE IRA plans or are curious about other retirement planning options, contact us today to schedule a consultation.