As the HR manager for a company, I'm interested in finding out information about SIMPLE IRA's. Other than the standard IRS Publications 560 & 590, I'm looking for information that would give me the steps necessary for establishing a SIMPLE IRA and also some more detailed information about the ups and downs of both types. We have a company of 11 people and do not want to go with an 401 (k). There is too much administration involved and the costs are too high for such a small company.

I also would like to know what it will cost if I set this up, is there a deadline for beginning the program Jan. 1, and can this be discontinued at anytime (with proper notice (?) to the employees)?


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  • I suggest you contact a broker. They only get money if you decide to go with them, but they can answer all of your questions up front.

    We recently switched 401k providers. I talked to um-teen people, but the ones who were the most helpful (and had the best price) were who we selected. We hadn't intended to go with brokers, but it was really worth it. An attorney can help you too, but it might cost you a lot more.
  • Hi Merlin

    I wouldn't rule out 401k too quickly. Yes, there is an admin cost, but the company (and the ees, especially the owners) stand to gain a lot more from a tax perspective. Many people forget that retirement plans are popular with companies for the tax deductions....not necessarily as a benefit for the ees. Keeping ees happy is just a nice added feature of the total package.

    IRAs are very limiting. I think you should go to a broker and ask for analysis of both options. There are a lot of simple, turn key type programs out there that are especially designed for the small employer. Then have the accountants look at which option best serves the company from a tax standpoint. Finally, the owners may want to talk to their own tax planners about the pros and cons of plans vs. IRAs. The advantages of the ret plan may outweigh any costs involved.

    Good luck.
  • Nicely put, Lori. I agree that a 401(k) can be a viable option for a small company. If your company wants to keep expenses to a minimum, a lot of the charges to run the 401(k) can be passed on to the participants. The fees are well worth it when compared with the tax benefits the participants will receive. You will find that most employees don't mind paying fees to gain this great benefit.

    I would also add that there are some great resources on the Internet for 401(k) information. I would recommend you start with ''. Click on the "small businesses" tab on the home page. You will find a listing of web 401(k) providers which are designed for small businesses. Also, there are links to other websites you can use to search for provider information. You should be able to obtain quotes from the providers for no cost.

    You also might check around locally for retirement plan brokers. Many brokers would be thrilled to set up a "start-up" plan. They earn their fees through the investments, and will provide quotes and information at no cost. They will assist you in setting up the plan, the investments, and the ongoing recordkeeping. Another added bonus is that they're often happy to come to your location and conduct meetings with your employees to explain the benefits of the plan, and give general investment information. Ask other small employers for recommendations, or check in the yellow pages under "Retirement Planning Consultants."

    I think if you check around and do some research, you'll find that setting up a 401(k) can be affordable for any company size. It's terrific that your company is thinking about the long-term future of its employees.

    Good luck!
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