| "we navigate > you arrive" |
| Steven King, CFP, MBA, AAMS 4555 Holland Street Wheat Ridge, Colorado 80033 303-420-8804 Toll Free: 877-420-8804 fax: 303-420-8805 sking@1stallied.com |
 |
| Information is good. Consulation is better. Personalized Guidance is best. Call us. We'll listen. |
| iiRetirement Plans for Business: SIMPLE Plans |
| Retirement Plans Financial Planning Investments |
 |
 |
| Securities offered through FIRST ALLIED SECURITIES, INC. member |
| Is a "SIMPLE" Retirement Plan right for your business? ______________________________________________________ This document is an introduction only and is not intended as advice. A detailed analysis of your circumstances would be required to determine your suitability for this or any other retirement plan. Numerous technicalities have been omitted from this introduction in order to improve readability. Some of these technicalities may have consequence for your situation. See the Home Page of this website for further disclaimers. ----------------------------------------------------------------------------------------------------------------------------------------------------Savings Incentive Match Plan for Employees (SIMPLE) Plan The SIMPLE retirement plan is less complex, but less flexible than a 401(k) plan. It is more complex and less flexible than a SEP plan. Advantages: No discrimination testing, such as with 401(k) Disadvantages: 1. Employer contributions are NOT discretionary. 2. Contribution limits are much lower than other plans. In a SIMPLE plan, each plan participant establishes an IRA account, to which the employer and employee can both contribute. Each participant has full control over his/her IRA account, and, generally, can establish that account with any trustee. Tax advantages For employer: Contributions are current expense items For employee: Employer and employee contributions and all gains are currently excludable. Eligibility Any business, whether incorporated or unincorporated, is eligible. Recent legislation has extended eligibility to Not-for-profit businesses, as well. The following employers are NOT eligible for an SIMPLE. 1. Any business that currently maintains any other type of qualified retirement plan. 2. Any business that has more than 100 employees who earn more than $5000 a year. Employer MAY EXCLUDE non-resident aliens, or workers covered by a collective bargaining agreement, or workers earning less than $5000 in that year. Employee Contributions An employee may elect to contribute up to $8000* per year to his or her SIMPLE account as a salary reduction. Because there is no discrimination testing, all employees are free to select their own contribution. *2003: $8000, 2004: $9000, 2005: $10,000 Employer Contributions The employer can make one of two types of contribution each year. 1. The employer matches, 1:1, each employee’s contribution, up to 3% of total compensation. In any two years out of a rolling five, the employer may cut off matching at as low as 1%. 2. The employer can contribute 2% of compensation to all employees, regardless of employee’s contribution level. Deductibility All annual contributions are deductible for income tax purposes. Interest or gains earned within the plan are excluded from taxable income. Loans Loans are not permitted from an SIMPLE plan. Distributions Withdrawals from a SIMPLE plan within two years of participation are subject to a 25% penalty. After two years, withdrawals are subject to the same limitations, taxation, penalties and exceptions as an IRA. However, the employees can roll-over the SIMPLE funds to his or her IRA at any time. |