When a Simple IRA is right for you

(c) Copyright 2006 by Frank Mitchell

Did you know that people who are self-employed have dozens of retirement plan options these days?

It can truly be overwhelming these days choosing between the different retirement plans. Most people have to turn to a Financial Advisor, and regrettably pay those stiff FA fees, in order to get their retirement plan started.

However, there are plenty of retirement plans that aren't that difficult to administer yourself, which makes them perfect for small business owners and of course the self-employed. SIMPLE IRAs are the absolute cream of the crop for these purposes, despite all the newer products and even the 'hybrid' options you might have heard about. The SIMPLE IRA plan allows you the flexibility to choose different structures, enabling you to customize the plan to fit your particular business. And best of all, unlike most employee retirement plans, no one has to fill out the dreaded IRS 5500 filings... This could mean the difference between hiring a full-time, in-house, payroll position or not!

SIMPLE IRAs are very close in structure to SEP IRAs

The main difference between SEP and SIMPLE IRAs is that although a SIMPLE plan doesn't allow an employee as much to be deferred from his or her paycheck, (the amount rises every year, but it's currently at $10,000 annually) it actually allows for the employee to add his or her own funds to the account, much like a Roth IRA or other, non-employer-funded plan does!

Although both SIMPLE and SEP plans allow the employer to contribute to the retirement of employees, this one strategic advantage has the biggest appeal to the self-employed. It allows them to have the exact dollar amount they want contributed into their retirement plan, at their own rate!

<< Previous    [1]  2  3  4    Next >>