SEP IRA

Archive for the ‘SIMPLE IRA’ Category

Question: My 941’s filed timely however they did not reflect my deductions for a SIMPLE IRA. How do I adjust?

FICA & Med are correct. How do I adjust the other taxes?

Answer: I’m confused by your question. Contributions to SIMPLE IRA’s do not lower the taxes you report quarterly on a 941 form. Yes, they are pretax dollars, but you still have to pay tax on the gross amount of income paid out if you are the employer. There is no deduction for SIMPLE IRA Contributions or what you have matched as the employer.

When a SIMPLE IRA is right for you � Part Four

© Copyright 2006 by Frank Mitchell

* Each employee must complete a SIMPLE IRA Adoption Agreement, found in the SIMPLE IRA handbook.

* The deadline for Salary Deferral contributions is no later than 30 days after the month of deferral.

* The maximum allowed Contribution is up to $10,000 annually, or 100% of your income as stated in your tax return.

That ��s it! If you can download forms, hand them to the correct people, and make your choices based on these plan guidelines, then you can do everything you need to set up your SIMPLE IRA immediately.

In conclusion, if you are looking for a retirement plan for your small business, then I strongly encourage you to learn more about the SIMPLE IRA plan. Even if you need something that this plan doesn’t have, it is still a very good idea to learn about the SIMPLE IRA and use this as a benchmark to judge the worth of other plans by.

You can easily learn everything you need to know about it for free on our resource website. There are also many other great resources online like Yahoo Finance, the Motley Fool, and Forbes, to name a few.

If you own a small business of any type, you owe it to yourself and your future to take this opportunity to learn about this incredibly flexible retirement plan.

Frank Mitchell is a retired FA who spends his time helping non-profit organizations set up their retirement plans.

Question: Traditional or Roth IRA?

OK, so there is a lot of information out there about this topic, but I can’t seem to find a straight answer to my question as it relates to me. Here goes…

I am interested in opening a retirement fund for my wife. I was thinking the Roth IRA would be best. More background needed though:

My wife is a stay-at-home mom who has no earned income. We file married-jointly and have an earned income somewhere in the $130-160K range. I do have a qualifying retirement plan which I contribute to at work. She (having no earned income) does not.

Based on my situation, I am confused first of all if I am technically eligible to open an IRA for her since she personally does not earn income. Second of all, I don’t know if I am eligible to contribute to a Roth IRA. Also, it does not appear I am eligible to deduct anything on a traditional IRA…but I’m not sure.

Can someone help me out? I’m looking for a simple, straightforward answer if possible.

Answer: The Roth IRA income limit for 2009 is $166k, so you are close to the limit, but apparently below it. If you think you may go above $166k, it would be best to wait and make your Contribution in early 2010, after you know the exact numbers. If your income is between $166k and $176, you are eligible for a partial Contribution.

The fact that your wife has no earned income is irrelevant. It’s your joint income that counts.

If you mean by “qualifying retirement plan” that you are covered by a defined benefit pension plan at work – as opposed to a defined Contribution 401k – then you are right that you can’t make deductible contributions to a traditional IRA. That makes a Roth IRA the way to go for your family.

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