Rules of Simple IRA Your Business Needs To Know

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                                                                What's Simple?
                                                                By Angie Dixon

  What's Simple?
 by: Angie Dixon

If you walk up to a stranger in the grocery store and ask them to define “simple,” as in “simple life,”
they’ll probably say something like “having less stuff.” Or they might hit you with a frozen turkey. But
probably they’ll associate simple with stuff.

The thing is that simple is not about how much or how little you have. You can have all the stuff you
want and have a simple life. That’s the key, though—the stuff you want. Simple is about having more of
what you want and less of the things that get in your way and trip you up.

If you continue questioning the guy with the turkey, he may hit you with it again, or he may spit out
some more associations with the word “simple.” Those words might include “nature,” “inexpensive,”
“boring,” “organized,” “miserly.” Those are words we think of when we think of simple living, but none of
them has to be associated with simplicity—certainly not boring and miserly. Sure, if you want to live
your simple life with nature, you can. If you want to get rid of most of your life and live on a shoestring,
you can.

The key to simple living is to have, as much as possible, only what you want. Naturally you have to
have things in your life that you don’t want, like traffic and Monday mornings. But your goal in reaching
simplicity is to have more of the things you do want, like good books and doughnuts on Sunday
morning, and maybe a good CD to listen to in the car while you’re in traffic on Monday morning.

Simple is really simple. It’s what you want, not what you don’t.

Angie Dixon helps small business owners get their acts together. She is a personal development coach
specializing in helping people integrate their home and work lives so they feel less stretched and more
balanced. Get her FREE EBOOK on balance at For questions or

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to discover how coaching can change your life, contact Angie at

You are free to use this article in ezines, web sites and print publications. If you do use it, please send
a quick email to Thank you.

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                         Rules of Simple IRA Your Business Needs to Know
                                          By Daniel Lamaute

Rules of Simple IRA Your Business Needs to Know
 by: Daniel Lamaute

A Savings Incentive Match Plan for Employees plan, better known as a SIMPLE plan, is an IRA-based
retirement plan available to employers with fewer than 100 employees.

Under a SIMPLE IRA plan, an employee can contribute a portion of his pay to his SIMPLE IRA
account. An employee can make a maximum contribution of $9,000, ($10,500 if age 50 and over), to
his SIMPLE IRA account for 2004. You, the employer, are required to make a contribution for every
worker who receives $5,000 or more in compensation.

You can match up to 3% of the salary for the employees who contribute to their SIMPLE IRA account.
You only have to match for those employees who contribute to the plan. In any 2 years out of a 5 year
period, after notification to the employees, you may elect a lower matching contribution percentage but
not less than 1% of salary.

Your business also has the option to select a “non-elective” mandatory company match of 2% of
annual salary for every employee. Under the “non-elective” contribution formula, even if an eligible
employee doesn’t contribute to his SIMPLE IRA, you must still contribute to his account 2% of his

Advantages of the SIMPLE IRA      Less expensive than a 401(k)

Disadvantages of the SIMPLE IRA A special tax penalty of 25% unique to the SIMPLE IRA for
withdrawals made within the first two years of opening a SIMPLE plan. (Congress is considering
eliminating this tax). A SIMPLE IRA is much less flexible than a 401(k) plan. Employer must make
contributions for all eligible employees. No contributions can be made to other qualified retirement
plans. All contributions are immediately vested, meaning all contributions belong right away to the
employee. A SIMPLE IRA plan can only be terminated prospectively, beginning no earlier than the
next calendar year. Contributions must continue until the plan is terminated. A SIMPLE IRA must be
set up at least 60 days prior to year end. Thus, October 1, is the last day to set up a new SIMPLE IRA
for the calendar year. No loans allowed.

While the SIMPLE IRA make senses under certain circumstances, this plan comes with a lot of strings
attached. If your business has no employees and you do not expect to hire employees in the near
future, consider using a Solo 401(k) with a loan feature instead of a SIMPLE IRA. And, if you have
more than 20 employees, look at setting up a regular 401(k) as an alternative.

To terminate a SIMPLE IRA plan, notify the financial institution that you chose to handle the SIMPLE
IRA plan that you will not be making contributions for the next calendar year and that you want to
terminate the contract or agreement with it. You must also notify your employees that the SIMPLE IRA
plan will be discontinued.

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Daniel Lamaute, CEO of Lamaute Capital, Inc. ( specializes in setting up
retirement plans. You may visit to access a free calculator that will help you
estimate what your maximum contribution might be under different plans.

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