Do you believe your small business can’t afford to offer your employees a retirement plan? Concerned about the time and cost to administer the plan? For businesses with 100 or less employees, a SIMPLE IRA retirement plan is a great option. Establishing a SIMPLE (Savings Incentive Match Plan for Employees) IRA is easy, with minimal paperwork, time, and easy to follow requirements. And with the passage of the SECURE Act in December 2019, employers with retirement plans may qualify for tax credits.
• Business must have 100 employees or less
• Employer makes an annual 2% SIMPLE contribution to all employees OR a matching SIMPLE contribution up to 3% for participating employees.
• Employees are notified annually of:
Their option to start, stop or change their contributions
The percentage the employer will contribute
The summary description of the company’s SIMPLE IRA plan
*Employer can only change the plan (increase, decrease, stop) annually.
• SIMPLE IRA plans are easy for employers to administrate. See https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-simple-ira-plans for easy to follow instructions.
• Employers can choose to administer the plan themselves or select a financial institution to do so.
• Employers can limit participants, based on employees’ previous and expected earnings. See the IRS link above for specifics. Employers can also choose to not have participant limits.
• Employer contributions are tax deductible.
• Employers with retirement plans may qualify for up to a maximum tax credit of $500/year under the SECURE Act (employer must offer automatic enrollment and allow qualified part-time employees to participate).
• Retirement plans make employers more attractive in our current hyper competitive job market.
Payroll Vault can help ensure that employee retirement plan contributions are deducted correctly from their paychecks. Call us today to see how we can help!