SIMPLE IRAs

A SIMPLE IRA is an employer sponsored plan where plan contributions are made to a participating employees IRA. The tax-deferred contributions are higher than a traditional or Roth IRA. The Internal Revenue Code uses the term SIMPLE plan to refer to a SIMPLE IRA. SIMPLE IRA are usually found in companies with less than 100 employees who want to provide an alternative to a qualified profit sharing plan.

The benefits of a SIMPLE IRA are totally portable by employees because the funding is held entirely in an IRA for the employee. Employees own their accounts and are always 100 percent vested and are in complete control their own accounts. Employers can make contributions to a SIMPLE IRA for employees over the age of 70 ½.

A SIMPLE IRA doesn’t provide an adequate retirement in it’s self. The benefits are not significant unless there the employee makes significant contributions regularly. Annual contributions are usually restricted to lesser amounts than with a qualified plan.

A SIMPLE IRA is a plan used by small businesses of less than 100 employees to provide a type of retirement benefit for their employees. Contribution limits are significantly less than those of a qualified 401K or 403B plan and the long range benefits are not a great. Even though a person over the age of 70 ½ cannot make contributions to their own IRA, an employer can make contributions to a SIMPLE IRA for these employees.