 Self-Directed Simple IRAs: Tax Advantages and Retirement All Rolled into One
SIMPLE is an acronym for Savings Incentive Match Plan for Employees (SIMPLE). A Simple IRA allows employers to plan for their employees’ retirement, and their own. This retirement plan is specifically designed for small businesses with 100 employees or less. Even after an employer exceeds the 100-employe limit, they are eligible to continue it for two years.
A Simple IRA allows employees to make salary-reduced contributions and receive matching contributions from their employer.
Self-Directed Simple IRA Contributions and Employer Match
Employers can match employee contributions to self-directed Simple IRA plans up to 3 percent each year. Or, employees can choose a non-elective two percent of compensation. All contributions are made directly to the IRA, with distributions being taxed as ordinary income.
Contribution limits for calendar year 2008 are $10,500 for salary deferral. If you are 50 years or older, there is a catch-up provides of $2,500, plus up to 3% of your salary. Access full information on contribution limits in Internal Revenue Service Publication 560.
Ideal Candidates for Self-Directed Simple IRA
If you fall into one of the following categories, you should look into a self-directed Simple IRA.
Desire to Maximize Retirement Investments: With a self-directed Simple IRA, you can take advantage of traditional and non-traditional investment vehicles like real estate, notes, tax liens and mortgages, among many more.
Small Business: A small business with 100 employees or less.
Employee Contributions: You want employees to contribute to their retirement plan via payroll deductions.
No-Fuss IRA Setup: A simple, straightforward retirement plan to set up and oversee.
Recruiting: If you are seeking to attract and retain the best and brightest employees.
IRA Contribution Flexibility: Retirement plan contribution flexibility.
Reduce Taxes: You want to reduce business taxes.
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