Business Retirement Plans
Simple IRA - A SIMPLE, or Savings Incentive Match Plan for Employees of Small Employers, is a salary reduction
arrangement similar to a 401(k) plan. However, SIMPLE contributions are deposited into a unique SIMPLE IRA. This IRA can
only accept contributions under a SIMPLE. No other IRA contributions are permitted.
What employers are eligible to adopt a SIMPLE? Any type of employer can adopt a SIMPLE if the employer meets two conditions:
1) An employer must have had 100 or few employees who each received at least $5,000.00 of compensation for the preceding year.
An employer must meet this condition for each year of the plan's existence. However, an employer who is no longer eligible
under this rule, but has maintained the plan for one or more years, will be considered eligible for the two years subsequent
to the year it last qualified.
2) An employer cannot maintain certain other retirement plans while maintaining
a SIMPLE. This includes plans qualified
under Internal Revenue Code (IRC) Section 401(a), annuity plans under IRC Section 403(a),
government plans, tax-sheltered
annuities under IRC Section 403(b), or a Simplified Employee Pension (SEP) plan.
SEP IRA - A simplified employee pension (SEP) plan is a retirement plan established by an employer. Each year, the employer
can contribute a certain percentage of each eligible employee's compensation directly to the employee's traditional IRA.
As a business owner, whether incorporated or not, you may establish a SEP plan. Sole proprietors and partnerships can have
SEP plans, even if there are no employees. However, if you currently maintain a qualified retirement plan, you cannot establish
the Internal Revenue Service (IRS) model SEP plan for your business.
Note: Wisconsin River Bank is not engaged in rendering tax, investment or other legal advice. If tax, investment or
legal advice is required, please seek the services of your qualified professional advisor.