A Simple IRA is one type of Individual Retirement Account available to those interested in saving for their retirement. Known as a Savings Incentive Match Plan for Employees, the IRA is available for self-employed individuals as well as small businesses. The contributions that are made in the IRA are tax deductible and all of the money that is invested into the account is tax free until you make a withdrawal.
The Simple IRA allows an employer to make contributions on the employee’s behalf. The employer can choose to match the contribution dollar for dollar or match it up to a specific amount. This is required even if the employee is not making any contributions to the account.
A Simple IRA allows for higher contribution amounts than the Roth or the traditional IRA. Where other types of IRAs allow you to contribute a max of $6000, the Simple gold investment allows up to $11,500 in contributions to be made. Additionally it is also much more affordable to set up as well as to control, and this is something that a business owner can appreciate with so much other stuff going on in their life.
In order to open a Simple IRA, the business or self-employed individual must run a company with fewer than 100 employees, and each of the employees must also earn more than $5,000 working for your company. This includes any employee that has worked for you during the year. Additionally those who choose the Simple IRA are required to have no other retirement accounts in place.
There are two types of Simple IRA accounts available. This is the employee account and the employer account. If you are employed with the company and want to take advantage of the Simple IRA you can do so with contributions from the employer for up to $11,500 of investments. Those who are over the age of 50 may also contribute an additional $2500 to the account to catch up to what other people may have already invested.
The Simple IRA isn’t as popular or as talked about as the other types of IRA, but it is definitely there and something that you should look into when it is time to talk about retiring. You are going to need a lot of money to retire comfortably with, so make sure that you are investigating all of the options that are there for you. Retiring has never looked so good!Both comments and pings are currently closed.