What are the contribution limits for SIMPLE IRA plans?
Employees who choose to participate in a SIMPLE plan can defer up to $10,500 of pretax earnings each year to be deposited by their employer in an IRA held in the employee’s name. Employees age 50 or older may make additional “catch up” contributions of $2,500 in 2008. The employer has two alternatives for contributing to each eligible employee’s SIMPLE IRA: • Match an employee’s contribution, up to 3% of the employee’s annual compensation; or • Make a flat 2% nonelective contribution to all eligible employees, regardless of whether the employee makes any contributions. Note that contributions to SIMPLE and SEP IRAs are immediately 100% vested. Can’t I just rely on selling my business to generate enough money to fund my retirement? No. The value of the business can disappear if new technology makes the business obsolete, global competitors emerge to offer the same product at a lower price, or the economy hits a downturn. Good advice: Begin putting SEP and SIMPLE funds away as soon as po
