While the most commonly heard of retirement savings plan is the 401k plan, there are various

other options for businesses and employees to choose from. While the 401k plan is common and

an excellent plan, there are some companies that find it impossible to offer this plan, because of

its expensive and more complex nature. The great thing for businesses, especially small ones, is

there are other alternatives that they can use in place of a 401k plan. One such alternative is the

Simple IRA, which many small businesses have found to be an easy and less-expensive answer.

Although there are several alternatives to using a 401k retirement pension plan, such as Keogh

Profit Sharing plans, and SEP IRA's, one of the most common choices among small businesses

is the Simple IRA. Why is the Simple IRA such a great choice for small businesses? Well, first

they are easy to start and maintain without mountains of confusing paperwork. They are also a

top choice because they are not as expensive to employers as other plans can be as well. Usually

this plan will only cost between $15-30 each employee to set up initially, and the record keeping

fees for the program will usually only cost about $600 each year.

Another reason that some small business owners decide on a Simple IRA retirements savings

plan is there are a couple different choices that they have when it comes to contributions. First, if

the employee is contributing to the Simple IRA as well, then the employer can match dollar for

dollar up to 3% of the total salary of the employee. On the other hand, if the employee is not

contributing, then the employer would only put in 2% of the employees annual salary up to

$3400 for each employee, each year. Employees also appreciate this program, since they are

100% vested from the first day they join the plan. They also feel good about you helping them

save retirement money.

There are some things to remember if you are considering making the Simple IRA your

company's retirement savings plan. First, you can only have a company of up to 100 employees

to use the Simple IRA program. If you have more than 100 employees, you will not be eligible to

use this plan. Also, if you are already using a 401k program, you cannot use both a 401k plan and

a Simple IRA plan within the same business. On the good side, if you currently have less than

100 employees you can start out with a Simple IRA plan. After your total employees grows to

more than 100, you will have two years to change over to another plan.

True, there are various retirement savings plans to choose from, but for small businesses, you

cannot beat the Simple IRA. If you are looking for a cost-effective and hassle-free way to supply

a retirement savings plan for your employees, then the Simple IRA is a great way to go for your

small business.