Inherent Characteristics of A SIMPLE IRA Plan

Tax planning is a long drawn process. However, this does not mean that it has to run throughout the year. In fact, in order to avail most tax benefits, a business needs to ensure that it has everything pertinent in place well in advance. This is exactly what we, as your chosen Rochester CPA, look to do for your business. There are various instruments that we try to use to get you the maximum Rochester taxes benefits. However, which ones fit your business depends entirely on the key nature of your business.



One of the instruments that we recommend for businesses looking for tax planning is the SIMPLE IRA plan. Here are some key characteristics of the SIMPLE IRA plan that should be of use to you.

1. Size of the business matters:

The first thing you need to know about the SIMPLE IRA plan if you are in the midst of tax planning is what any Rochester CPA would tell you. This is that the SIMPLE IRA is only limited to those companies whose employee strength does not exceed 100. This means that you can only avail the SIMPLE IRA plan if your business employs 100 or less than 100 employees.

2. Adopting the SIMPLE IRA plan:

If you know that your business meets the prerequisites then all you need to do is contact a Rochester CPA like us and ask them to set everything up for you.

We would ensure that you get the Rochester taxes benefits by choosing whether a Form 5304-SIMPLE, 5305-SIMPLE or a SIMPLE IRA prototype suits your organization the best. Subsequently, we would help you establish it.

3. Two forms of contributions:

There are two ways through which you can contribute in a SIMPLE IRA plan. You should note, however, that your benefits in terms of Rochester taxes would remain the same, regardless of your choice. Your choices would be between a matching contribution of up to 3 percent of the employee’s salary and a 2 percent contribution for each employee which would be non elective.

4. Mandatory exclusivity:

Establishing a SIMPLE IRA plan means, however, that you cannot partake in any other retirement plan. Effectively, this is something that needs to be assessed. This is also a stage of tax planning where you need our help as your Rochester CPA.

Basically, in our capacity as your Rochester CPA, we would assess whether the Rochester taxes benefits you would get from a SIMPLE IRA plan would be enough for your organization by themselves or not.
If we find during the tax planning procedure that you need more Rochester taxes deductions and exemptions then we would not recommend the SIMPLE IRA for you. In either case, expert guidance from an experienced Rochester CPA is something you should look for.