An important tax deadline is approaching for business owners. If you’re self-employed or own a small business and don’t currently have a retirement plan in place, consider setting up a SIMPLE plan (Savings Incentive Match Plan for Employees). These plans are limited to employers with 100 or fewer employees. A SIMPLE may be structured either as an IRA or 401(k) plan. An important advantage to the SIMPLE-IRA plan is that setup and administration costs are minimal.
* Don’t miss the deadline. To establish a SIMPLE for 2014, you’ll have to act soon. You have until October 1 to establish a plan for 2014.
* Cut your taxes. The company’s contributions are tax-deductible. You have the option of contributing either 2% of the wages of every eligible employee or making matching contributions of up to 3% of the wages of those employees who choose to participate in the plan.
* Encourage your employees to participate. Eligible employees can elect to have a portion of their earnings withheld each pay period, limited to a total of $12,000 for 2014. Those aged 50 or older may contribute an additional $2,500. Amounts withheld for the SIMPLE plan reduce the employee’s taxable income and grow tax-deferred.
These plans offer a way to cut your taxes, attract and retain good employees, and help your employees build a fund for retirement. To find out more about SIMPLEs and other retirement plan options, please give us a call.
Tags: Simple IRA
Written by: Doug Rodrigues