Savings Incentive Match Plan for Employees (SIMPLE IRA)

 In this written salary reduction arrangement, eligible employees contribute to an IRA in their name. Your employer is required to make annual contributions for each eligible participant. This type of arrangement is available to self-employed individuals or owners of companies that have 100 or fewer employees and no qualified retirement plan. Employees are eligible for a SIMPLE-IRA if they earn at least $5,000 annually. SIMPLE-IRAs may be funded by annuities.

The Maximum annual amount you can contribute could be changed every year. If you are age 50 or older, you are eligible to contribute an annual “catch-up” contribution each year of up to the desired limit of that year. The money contributed to a SIMPLE IRA will accumulate tax deferred until money is withdrawn. Withdrawals are subject to ordinary income tax and, if taken before age 59 ½, a 10% federal income tax penalty may apply, and this penalty is increased to 25% for distributions taken within the first two years of participation in the plan.

Simplified Employee Pension Individual Retirement Arrangement (SEP IRA)

A Simplified Employee Pension plan, commonly known as a SEP IRA, is a retirement plan specifically designed for self-employed people and small-business owners. All contributions are made directly to an individual retirement account (IRA) set up for each employee



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