SIMPLE IRA

A SIMPLE IRA is a type of employer provided retirement plan in the United States. Specifically, it is a type of Individual Retirement Account that is set up to be an employer provided plan. It is similar to more well know plans such as the 401(k) and 403(b) (also known as TSA plans), but offers simpler and less costly administration rules. This allows SIMPLE IRA's to be affordable for small businesses or sole proprietors that would otherwise not be able to afford a 401(k). The tradeoff is that the contribution limit for SIMPLE plans is lower than for most other types of employer provided retirement plans, $9,000 for 2004 as compared to $13,000 for a 401(k). For a non profit employer, there is no advantage in establishing a simple plan over a 403(b) since the 403(b) does not have more expensive administration.

Related Topics:
Employer - Retirement plan - United States - Individual Retirement Account - 401(k) - 403(b) - Business - Sole proprietor - Non profit

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