Is a SIMPLE IRA Right for Your Small Business?/ August 6th, 2021
If you own a small business with fewer than 100 employees, a Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) IRA might be your best bet for a retirement-savings account. This type of account allows small business owners to have a matching contribution plan which is similar to a 401(k) plan.
A SIMPLE is easy to set up with little paperwork. Employees are allowed to contribute up to $13,500 pretax in 2021. Employees who are 50 and older get to contribute an extra $3,000.
Employers have two choices in determining their contributions to a SIMPLE IRA plan. You can either match employees' contributions dollar-for-dollar up to 3% of compensation or contribute up to 2% of compensation for all employees, whether they participate in the plan or not.
You can set up a SIMPLE IRA plan effective on any date between Jan. 1 and Oct. 1, provided you didn't previously maintain a SIMPLE IRA plan. If setting up a SIMPLE interests you, the deadline to establish an account for 2021 is Oct. 1.
Let the financial experts at your credit union answer your questions and discuss small business retirement account options for you.