Small Businesses Still Have Time to Establish a SIMPLE IRA
Remember that this popular retirement-savings plan features low cost, flexibility, and minimal administrative requirements.
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The information provided is not directed at any investor or category of investors and is provided solely as general information about Lord Abbett's products and services and to otherwise provide general investment education. None of the information provided should be regarded as a suggestion to engage in or refrain from any investment-related course of action as neither Lord Abbett nor its affiliates are undertaking to provide impartial investment advice, act as an impartial adviser, or give advice in a fiduciary capacity. If you are an individual retirement investor, contact your financial advisor or other fiduciary about whether any given investment idea, strategy, product or service may be appropriate for your circumstances.
Traditional IRA contributions plus earnings, interest, dividends, and capital gains may compound tax-deferred until you withdraw them as retirement income. Amounts withdrawn from traditional IRA plans are generally included as taxable income in the year received and may be subject to 10% federal tax penalties if withdrawn prior to age 59½, unless an exception applies.
A SIMPLE IRA plan provides small employers with a simplified method to contribute toward their employees' and their own retirement savings. Employees may choose to make salary reduction contributions and the employer is required to make either matching or non-elective contributions. Contributions are made to an Individual Retirement Account (IRA) or annuity set up for each employee (a SIMPLE IRA). A SIMPLE IRA plan account is an IRA and follows the same investment, distribution and rollover rules as traditional IRAs.
SAR SEP IRA—A Salary Reduction Simplified Employee Pension Plan is a simpler alternative to a 401(k) and is available only to companies with 25 or fewer employees. It gives employees the opportunity to make contributions to their SEP accounts with pretax dollars and reduce their current year's net income. Also called a 408(k) plan.
A 401(k) is a qualified plan established by employers to which eligible employees may make salary deferral (salary reduction) contributions on an aftertax and/or pretax basis. Employers offering a 401(k) plan may make matching or non-elective contributions to the plan on behalf of eligible employees and may also add a profit sharing feature to the plan. Earnings accrue on a tax-deferred basis.