If you operate a company with 100 or fewer employees, you’re eligible to establish a Savings Incentive Match Plan for Employees (SIMPLE IRA), a type of tax-deferred plan for small businesses, or a Simplified Employee Pension (SEP) IRA. Both of these plans could be attractive options for small businesses, and the experts at Dowd can help you determine which might be right for your growing company.
SIMPLE IRAs
As the name implies, SIMPLE IRA contribution limits are straightforward—you can choose between a contribution of 2% of the employee's salary or a dollar-for-dollar matching contribution of the employee's contributions, up to 3% of their salary. While employer contributions are necessary, this plan is beneficial to growing businesses, allowing for easy and inexpensive plan maintenance. Learn about our other business wealth management tools to see what options suit your businesses unique needs.
Employee Benefits
SIMPLE IRA plans can also be a desirable incentive for potential employees, allowing you to bring in new talent and retain workers. On the employee side, contributions are not subject to a maximum wage requirement; any individual who is still employed over the age of 72 can still continue to contribute to the SIMPLE IRA. As of 2021, SIMPLE IRA contribution limits for employees were set maximum of $13,500 annually, with that amount set to increase periodically for inflation. Contributors over the age of 50 are allow to make catch-up contributions to increase their annual SIMPLE IRA limits to $16,500.
SEP IRAs
When you establish a SEP IRA, your eligible employees who participate in the plan must establish a traditional IRA to which you will deposit SEP contributions. This an attractive option for many business owners because it does not come with many of the start-up and operating costs of most conventional employer plans. SEP IRAs are treated like traditional IRAs for tax purposes and allow the same investment options and rollover rules. Dowd Wealth Management can operate as your investment partner to establish and maintain either of these plans for your growing company. Contact us to learn how our fully licensed financial service agents and brokers can create a strategy for you today.