Simple IRA

The SIMPLE IRA is a low-cost retirement plan suited for small employers who want to help their employees plan for retirement through shared contributions.

A Savings Incentive Match Plan for Employees (SIMPLE) IRA is an IRA-based plan that gives small employers an easy way to make contributions toward their employees’ retirement by either matching employees’ contributions or making non-elective contributions to all employees.

Benefits include:

• Higher employee retention as the plan allows employees to accumulate assets for their retirement.
• The startup and maintenance costs are very low compared to qualified plans.
• Available to business entities, including self-employed persons, partnerships and corporations, as well as certain tax-exempt organizations
• Both employee and employer contributions are tax deductible
• Earnings inside the account are tax deferred until withdrawal because the contributions are made to an IRA.

For 2020, the maximum amount employees may defer is limited to $13,500. Participants who are 50 and older may make additional “catch-up” contributions of up to $3,000.  (Here is a detailed spreadsheet of contribution limits.)