A Savings Incentive Match Plan for Employees (SIMPLE) IRA is a retirement savings plan that is ideal for small business owners with 100 or fewer employees. The plan is easy to set up, maintain, and is cost-effective compared to traditional retirement plans such as 401(k)s. In a SIMPLE IRA, employees can contribute a percentage of their salary or a fixed dollar amount, and employers can either match the employee's contribution dollar-for-dollar up to 3% of the employee's compensation or make a non-elective contribution of 2% of the employee's compensation.
SIMPLE IRAs offer several advantages to small business owners. First, they are easy to set up and maintain, and there are no annual filing requirements. Second, the employer's contributions are tax-deductible, and the employee's contributions are tax-deferred until retirement. Third, the plan allows for catch-up contributions for employees who are 50 years old or older. Fourth, the plan is flexible, and employers can choose to make a matching contribution or a non-elective contribution. Finally, employees are always 100% vested in the funds contributed to their account, meaning they have full ownership of the money in their account.
Small medical practices with just a handfull of staff are a perfect fit for this option.