| Retirement planning works to the benefit of both | | | | possible since his contribution is being matched |
| the employer and the employee. A good | | | | 100% by his employer. Of course there is a limit |
| retirement plan is an important job incentive. By | | | | on how much the employer can contribute as well |
| making a retirement plan available employers are | | | | - no more than 3% of the employee's income. |
| able to satisfy the needs of good workers and | | | | The employee is not required to contribute any |
| those workers are happy to continue performing | | | | funds toward retirement. The plan can be set up |
| well for their employer. The employees benefit | | | | so that the employer contributes an amount equal |
| from having a tax deferred savings for their | | | | to 2% of the employee's salary into the plan and |
| future. This is how a simple retirement plan works. | | | | the employee makes no contribution. If |
| What is Involved | | | | employees no longer want to be a part of the |
| For small businesses or less than 100 employees a | | | | plan they can cease participating at any time. |
| simple plan allows them to offer 401k or IRA | | | | If you have a simple retirement plan and would |
| benefits to their employees as a retirement plan. | | | | like to opt out of it you should consider this |
| To take advantage of this plan employees cannot | | | | carefully. Early withdrawals are subject to high |
| be participants of any other retirement plan. Since | | | | penalties, up to 25%. Also taxes are imposed on |
| 1996 the simple plan has operated under the laws | | | | the earnings at the time the funds are withdrawn. |
| of the Small Business Jobs Protection Act. | | | | It is very expensive to terminate a retirement |
| Another benefit to the simple retirement plan is | | | | plan prematurely so serious thought should be |
| that it allows the contributor to determine how | | | | given before doing so. |
| much he will contribute, up to $6,000.00. The | | | | You might even be better off to borrow money, |
| employer matches the contributions of the | | | | using the retirement fund as security, if you can |
| employee, not in excess of 3% of the | | | | find a lender that will allow you to. Leaving the |
| employee's earnings. This way the employee can | | | | money in your retirement fund lets it compound |
| control how much he wants to put toward his | | | | tax-free, which can balance off the interest you |
| retirement each month. It is in the best interest | | | | pay on the loan, or might even work out to your |
| of the employee to contribute as much as | | | | advantage in some cases. |