SIMPLE IRAs

Many small businesses, partnerships and sole proprietors that want to offer a retirement plan for themselves and their employees choose a SIMPLE IRA.

Among the features of a SIMPLE IRA --  – or Savings Incentive Match Plan for Employees -- are:

• They can be easy to administer, and don’t require  legal  or administrative fees
• Employees can defer a portion of their salary into their IRA account
• The employer can match contributions up to 3% of an employee’s salary --- making the plan an attractive retention tool
• Employer contributions offer  tax advantages
• Since employees make their own investment decisions, the business has no fiduciary responsibility

Reward your employees with an IRA match

A SIMPLE IRA – or Savings Incentive Match Plan for Employees -- is designed for businesses with 100 or fewer employees, who earned $5,000 or more during any two preceding calendar years. There are no age restrictions.

Under the plan, employees contribute through payroll deduction, and the employer matches the contribution in one of two ways:

• 100% match on the first 3% of the employee’s salary deferral for participating employees or
• 2% nonelective contribution for all eligible employees, regardless of whether they participate

The contributions and earnings have the opportunity to grow tax-deferred until withdrawn, helping employees potentially accumulate retirement savings faster.

Withdrawals made prior to age 59½, however, may incur a 10% tax penalty and may be taxed as ordinary income.

Employees can contribute up to $10,500 to their SIMPLE IRA in 2008 ($13,000 for participants over 50).

Take the next step

To find out more about SIMPLE IRAs, contact a Nationwide® professional.

 

 

 

Neither Nationwide nor its representatives provide tax or legal advice. You should consult your attorney or other professional advisor for answers to specific questions.

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