Save Time and Money SIMPLE IRAs

From AIG Funds

What are SIMPLE IRAs? 

A SIMPLE IRA or Savings Incentive Match Plan for Employees is a type of retirement plan designed for small businesses and self-employed individuals. A SIMPLE IRA can only be established for companies with 100 or fewer employees earning at least $5,000 in compensation during the preceding year. A company may not have any other retirement plans besides the SIMPLE IRA.


Key benefits of a SIMPLE IRA

  • Easy to set up and administer: SIMPLE IRAs are usually less expensive to establish and run than 401(k)s and other employer-sponsored retirement plans.
  • Salary reduction contributions for employees:  Unlike SEP IRAs, employees have the option to contribute to a SIMPLE IRA through reductions of their salary for each pay period.
  • Valuable tax benefits for owners and employees: Business owners can generally deduct all amounts that are contributed to the SIMPLE IRA on behalf of employees. Salary reduction contributions are also excluded from an employee’s gross income for the year, which can reduce current income taxes.
  • Employers must make a contribution every year:  Business owners are required to contribute either 2% of an employee’s compensation or a dollar-for-dollar matching contribution of up to 3% of pay—regardless of whether or not an employee contributes to the account. See IRA Contributions and Deductions at a Glance for details. 


Talk to your financial advisor today to see if a SIMPLE IRA makes sense for you and your business.