The following information is not intended as legal or tax advice. 
Obtain professional advice before taking action on this information.

SIMPLE - IRAs

Great For

• Sole proprietorships with no employees or few participants 

• Partnerships where only one partner participates 

• Small family businesses - hire spouse & kids and deduct 100% of W-2 up to $7,000 

• Corporations with high turnover and low participation 

• Businesses whose 401(k) plan didn't work due to low participation 

• Businesses with 100 or less employees 

Benefits

• Defer 100% salary up to $7,000 for 2002 (indexed $1,000 each year thru 2005) including spouse and kids as employees 

• An extra $500 in 2002 (indexed $500 each year thru 2005) can be deferred for any one who is age 50 by the end of the year (age 50 catch up) 

• Can make available immediately or exclude employees with less than 3 years of service and those making less than $5,000 

• Make 3% company matching contribution after December 31st up to April 15th (or later with extensions) only for eligible employees who defer up to 3%, i.e., 1% deferral = 1% match

• Business owners, including self employed, can also receive 3% match plus regular deferral and age 50 catch up

• Only calendar year plans (no corporate fiscal plans) 

• Can not have any other retirement plans in the year you use SIMPLE - IRA