Retirement Plan Comparison Chart 2015 Limits - page 3

Retirement Plan Comparison Chart
Simplified Employee Pension (SEP)
SIMPLE IRA
What It Is:
A low-cost retirement plan with complete contribution
flexibility from year to year. It is appropriate for self-
employed individuals and small-business owners, as
well as business owners with few or no employees.
A SIMPLE IRA plan is intended for smaller businesses. It
is appropriate for self-employed individuals and small-
business owners, as well as business owners with few
or no employees. This plan offers an employer the ability
to establish an important employee benefit without the
expense and complex reporting that 401(k) plans and
other qualified retirement plans generally require.
Who Contributes:
Employer only.
Employer may make discretionary contributions.
Employers and employees. Employees can contribute
up to $12,500 in pre-tax dollars. Employers contribute
the mandatory 100% match of employee contributions
up to 3% of compensation or a mandatory
contribution of 2% compensation for all eligible
employees, regardless of whether the employee
contributes.
Key Advantages:
Simple and inexpensive to establish and administer.
Individual Retirement Accounts (IRAs) are
established for each employee and each employee
determines how contributions will be invested.
Employer is not required to make contributions every
year. The employer may make contributions up to a
maximum of 100% of an employee’s compensation
(not in excess of $265,000 for 2015) or, if less,
$53,000 in 2015.
Employer may deduct contributions up to 25% of
total aggregate compensation for all participants.
Simple and inexpensive to establish and administer.
Individual Retirement Accounts (IRAs) are
established for each employee and each employee
determines how contributions will be invested.
Catch-up contributions may be made by
participants age 50 and over. The catch-up
contribution is limited to $3,000 in 2015.
Points to Consider:
Employees are not allowed to contribute.
Loans are not permitted.
All employees must be included in the plan
(provided they meet certain eligibility requirements).
Contributions are 100% vested, so if an employee
resigns in the same year a contribution is made, he
or she gets to keep that entire contribution.
If an employer makes a contribution for himself
or herself, a similar contribution must be made
for each employee.
Simple IRA can be the only plan of the employer.
Employer contributions are mandatory and 100%
vested immediately.
Employees can contribute a maximum of $12,500
in 2015.
Employer’s maximum contribution is 3% of
compensation for all eligible employees. Other
plans may allow more in contributions.
Loans are not permitted.
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