SIMPLE IRAs

A SIMPLE IRA or SIMPLE plan is a retirement plan that small employers can set up to the benefit of their employees.  Savings Incentive Match Plans for Employees or SIMPLE IRA plans can actually be set up as part of the company's 401(k) plan or using IRAs.

SIMPLE IRAs offer a tax advantage to the employee because the employee can agree to have the employer reduce their salary by a fixed percentage each pay period and direct those amounts to an IRA on your behalf.  In 2004, SIMPLE plans have a contribution limit of $9,000.  In 2005, the SIMPLE plan contribution limit rises to $10,000.