You will find several investement vehicles for the small business and its employees, but the most versatile one is the Simple IRA.
While the most commonly heard of retirement savings plan is the 401k plan, there are various other options for businesses and employees to choose from. While the 401k plan is common and an excellent plan, there are some companies that find it impossible to offer this plan, because of its expensive and more complex nature. The great thing for businesses, especially small ones, is there are other alternatives that they can use in place of a 401k plan. One such alternative is theSimple IRA, which many small businesses have found to be an easy and less-expensive answer.
Although there are several alternatives to using a 401k retirement pension plan, such as Keogh Profit Sharing plans, and SEP IRA's, one of the most common choices among small businesses is the Simple IRA. Why is the Simple IRA such a great choice for small businesses? Well, first they are easy to start and maintain without mountains of confusing paperwork. They are also a top choice because they are not as expensive to employers as other plans can be as well. Usually this plan will only cost between $15-30 each employee to set up initially, and the record keepingfees for the program will usually only cost about $600 each year.
Another reason that some small business owners decide on a Simple IRA retirements savings plan is there are a couple different choices that they have when it comes to contributions. First, if the employee is contributing to the Simple IRA as well, then the employer can match dollar for dollar up to 3% of the total salary of the employee. On the other hand, if the employee is not contributing, then the employer would only put in 2% of the employees annual salary up to$3400 for each employee, each year. Employees also appreciate t his program, since they are 100% vested from the first day they join the plan. They also feel good about you helping them save retirement money.
There are some things to remember if you are considering making the Simple IRA your company's retirement savings plan. First, you can only have a company of up to 100 employees to use the Simple IRA program. If you have more than 100 employees, you will not be eligible to use this plan. Also, if you are already using a 401k program, you cannot use both a 401k plan and a Simple IRA plan within the same business. On the good side, if you currently have less than 100 employees you can start out with a Simple IRA plan. After your total employees grows tomore than 100, you will have two years to change over to another plan.
True, there are various retirement savings plans to choose from, but for small businesses, you cannot beat the Simple IRA. If you are looking for a cost-effective and hassle-free way to supply a retirement savings plan for your employees, then the Simple IRA is a great way to go for your small business.
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