About SIMPLE 401ks

I run a graphics business with 80 employees. Is my business too big for a SIMPLE 401k?- Jeremy Grahams, Maine.

The SIMPLE 401k plan is a great retirement savings plan for employees. This plan was established for small businesses that employ up to 100 employees. So you can definitely set up a SIMPLE 401k for your graphics firm. The employees who will participate in this plan should have earned at least $5,000 in the previous year. Plus they cannot be participants to any other retirement plan offered by you.

The employer’s contribution with a SIMPLE plan is a dollar for dollar match up to 3% of the employee’s salary. The best part for your employee about this plan is that even if he makes zero contributions in a year, you still have to make a 2% employer’s contribution. This is the non-elective contribution made to this plan.

Another advantage of the SIMPLE 401k to your employee is that your contributions are immediately vested. These attractive employee benefits make it easy for you to ensure full employee participation in your 401k plan. In addition, by offering a good retirement benefit plan like the SIMPLE 401k you make your business highly attractive to the best talent in the market.

The SIMPLE plan does not require the mandatory testing that the law requires you, the employer, to undertake for regular 401k plans. This lets you save quite a nice sum that you would otherwise have paid for this process.

If you want to set up a SIMPLE plan for your business with the least hassle then choose a DIY 401k suite like http://401keasy.com/. Such software packages make it easy for you to set up, administer and track the 401k plan. Many businesses prefer to use such packages because it makes the periodic updating process on payday easy and hassle free.

About Elliot Earl, Director, Pension Trade Association
Director, Pension Trade Association Founded in 1982, the Pension Trade Association [California Domestic Nonprofit Corporation #C1629080] is dedicated to helping workers save for their retirement through expanded coverage of 401k -type defined contribution pension plans.

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