
Plans with IRAs
Highlights of plans with IRAs - select a plan for additional information and resources about that plan.
Payroll Deduction IRA
- Can be set up by any employer
- Participant's retirement benefits based on participant’s account balance
- Employees may contribute to their own retirement by payroll deduction, up to $5,0001 and an additional $1,000 if age 50 or older
- Can cover all employees or selected employees
- Easy to set up and operate
- No annual return required by the employer for the plan
- Annual nondiscrimination testing not required
- Little design flexibility
- Employees may not take loans from the plan
- Employees may withdraw their balance at any time, subject to tax
- Immediate vesting in full account balance
Simplified Employee Pension (SEP)
- Can be set up by any employer
- Participant's retirement benefits based on participant’s account balance
- Employer can decide each year whether and how much to contribute
- Only the employer is allowed to contribute to the plan on behalf of employees, up to the lesser of 25% of an employee’s compensation or $50,0001
- Must cover all employees who are at least 21 years of age and have been employed in 3 of the last 5 years with compensation of at least $5501
- Easy to set up and operate
- No annual return required
- Annual nondiscrimination testing not required
- Little design flexibility
- Employees may not take loans from the plan
- Employees may withdraw their balance at any time, subject to tax
- Immediate vesting in full account balance
SIMPLE IRA
- Can be set up by any employer with 100 or fewer employees and no other retirement plans
- Participant's retirement benefits based on participant’s account balance
- Allows employees to contribute to their own retirement through salary deferrals, up to $11,5001 and an additional $2,5001 if age 50 or older
- Employer is required to make annual minimum contributions
- Must cover all employees who have compensation of at least $5,000 in any 2 prior years and are expected to earn $5,000 in the current year
- Easy to set up and operate
- No annual return required
- Annual nondiscrimination testing not required
- Little design flexibility
- Employees may not take loans from the plan
- Employees may withdraw their balance at any time, subject to tax
- Immediate vesting in full account balance
1Dollar Limits are for 2012 and are subject to cost-of-living adjustments for future years.
