Tax Tip of the Week
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Businesses: Set up SIMPLE plan by October 1
For the week of
September 10, 2001
If you're self-employed or own a small business and don't currently have a retirement
plan in place, consider setting up a SIMPLE plan (Savings Incentive Match Plan for Employees). These plans are
limited to employers with 100 or fewer employees. A SIMPLE may be structured either as an IRA or 401(k) plan. An
important advantage to the SIMPLE-IRA plan is that setup and administration costs are minimal.
Don't miss the deadline. To establish
a SIMPLE for 2001, you'll have to act soon. You have until October 1 to establish a plan for 2001.
Cut your taxes. The company's contributions
are tax deductible. You have the option of contributing either 2% of the wages of every eligible employee or making
matching contributions of up to 3% of the wages of those employees who choose to participate in the plan.
Encourage your employees to participate.
Eligible employees can elect to have a portion of their earnings withheld each pay period, limited to a total of
$6,500 for 2001. The annual limits increase beginning next year. Amounts withheld for the SIMPLE plan reduce the
employee's taxable income and grow tax-deferred.
These plans offer a way to cut your taxes, attract and retain good employees,
and help your employees build a fund for retirement. To find out more about SIMPLEs and other retirement plan options,
please give us a call.
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and current tax information.
The information contained in this site is of a general nature and should not be acted upon in your specific situation
without further details and/or professional assistance.
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