If you're considering a retirement plan for yourself and your employees, you might want to review the advantages of a SIMPLE-IRA (Savings Incentive Match Plan for Employees). Remodelers who have set one up say it is suitable for small businesses and relatively easy to administer.
Christine and Steve Ramaekers considered several retirement plan options for Mainstreet Restorations & Remodeling, their 10-employee company in Birmingham, Mich. They chose a SIMPLE-IRA for its ease of administration. The financial institution takes care of most of the paperwork and the plan does not require tax filing or third-party compliance testing. Christine participated in a 401(k) plan with a previous employer, but she was not fully vested for seven years. She likes that with the SIMPLE plan, employees are immediately 100% vested.
At the time the company put the program in place, Ramaekers was looking for a way to attract employees. “This program is good to lure prospective employees, good for us personally, and advantageous for our existing employees,” she says.
Jeb Breithaupt, owner of Jeb Breithaupt Design Build, in Shreveport, La., previously set up a 401(k) plan for his employees, but says the SIMPLE-IRA is more cost-effective and easier to administer. Employees contact the financial institution directly with any questions.
Breithaupt says 40% of his employees participate by contributing part of their salary. Though health insurance is more of an attraction for potential and existing employees, he says the retirement plan provides an additional incentive by rounding out the firm's benefit package.