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Finance For Dummies

Finance For Dummies offers personal finance information on investing, retirement investing, finance, insurance, credit cards, loans and more. Personal finance education is our goal.

Wednesday, June 21, 2006

Retirement Planning: SIMPLE IRAs

SIMPLE IRAs are another retirement planning option for small business owners. Owners can to make contributions toward their employees' retirement and their own retirement with a SIMPLE IRA. Here is some important information regarding SIMPLE IRAs:

  • Any business with 100 employees or less is can have a SIMPLE IRA
  • IRS forms 5304-SIMPLE or 5305-SIMPLE is used to set up a SIMPLE IRA
  • The company must allow all employees to participate
  • The company must give information to all employees regarding the SIMPLE IRA
  • Each eligible employee may make a salary reduction contribution and the employer must make either a matching contribution or a non-elective contribution
  • Employees can defer up to $10,000
  • Employers must match dollor-for-dollar up to 3%
  • Employers can decduct all their contributions on their taxes


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