Simple IRA Services in Seattle, WA
Overview Of The Simple IRA
A Simple IRA is used by owners looking to provide a retirement benefit to their employees (and themselves) with minimal administrative work required. The employer has only two options in terms of contributing to their employees retirement (i) match employees' contributions up to 3% of compensation or (ii) simply contribute 2% of employees compensation (regardless of whether employees contribute). Employees are limited to saving up to $15,500 or $19,000 if over 50 years old. The SIMPLE IRA provides similar characteristics as a full 401(k) but is significantly cheaper to setup and maintain and therefore is typically more suitable for small businesses.
Primary User Of A Simple IRA
Businesses with 100 or fewer employees and self-employed individuals
Available to sole proprietors, partnerships, LLCs, C corps and S Corps
Advantages Of Setting Up A Simple IRA
Salary deferral plan with less administration
Allows employees to contribute and employer to match
Wide range of investment choices
Who Can Contribute To A Simple IRA
Funded by employee deferrals and employer contributions
2023 Employer Contribution Limits
Either match employee contributions up to 3% of compensation (can be reduced to 1% in any two out of five years) or contribute 2% of each employee's compensation, up to $5,000
2023 Employee Contribution Limits
Up to $15,500 in salary deferrals; $19,000 if age 50 or older
Admin Responsibilities
No employer tax filings; certain annual employee notifications must generally be made by November 1st
Access to Assets
Withdraw at any time, but a 10% penalty may apply if under the age of 59.5 years. If the withdrawal is taken within first two years of participation in the plan, that penalty increases to 25%
Plan Set up Deadlines
Establish by October 1