What are the Advantages of a Simple IRA?


Be prepared for retirement with a Savings Incentive Match Plan for Employees Individual Retirement Account or SIMPLE IRA. A SIMPLE IRA is employer-provided retirement plans that allow employees to contribute and invest money in order to allow their retirement to grow. Though there are other retirement plans available, Simple IRA plans have a few advantages over these other plans.

Small Businesses are able to participate

Businesses that have less than 100 individuals employed at their business or organization are eligible to receive the benefits of a Simple IRA account. These individuals do not have to be full time employees to participate. The less than 100 employees must have earned at least $5,000 or more in the last calendar year. This allows small businesses to offer seasonal, part-time, and full-time workers a Simple IRA as a retirement plan.

Time is saved

Simple IRA is able to save time because of their setup process. Setup is as easy as a phone call. To get the ball rolling on setting up a Simple IRA just make a phone call to a financial institution. Once a phone call has been made the employer is able to adopt a Simple IRA plan that will suit his or her organization. Once the plan has been chosen, the employer will notify the employees about the options available to them. This will give employees the information needed to choose to participate in the selected Simple IRA plan or not.

Options are offered

The employer that has started the plan can choose the amount they contribute to their employees plan. The amount added by the employer can match what has been contributed by the employee or the employer can opt to contribute a fixed percentage rate. The amount that can be matched by the employer can be up to 3%.

No IRS for the employer

Most of the work regarding a Simple IRA is handled by the financial institution. This is an advantage for the employer because they do not have any filing requirement from the IRS. These requirements are handled between the financial institutions and the employee.

Easy to Fund

Regular payroll deductions can be used to contribute to an employee’s Simple IRA. The employee can opt to have a certain amount or percentage deducted from their payroll in order to fund their Simple IRA. Their contributions will be able to grow with the help of interest or dividends tax free. The owner of the Simple IRA account will not be taxed until the funds are withdrawn from the account.
In conclusion, Simple IRAs have many advantages for employers and employees. These advantages can help to save time, offer retirement solutions for small business owners, and help an employee contribute to their own retirement.

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