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SIMPLE Plans
For more than 50 percent of small-business owners,
employee recruitment and retention were the major
reasons for offering a retirement plan.
A savings incentive match plan for employees
(SIMPLE) may be just the bait to lure and catch
qualified employees. SIMPLE plans are easy to
understand and, more important, easier to manage.
Designed for sole proprietors and companies with 100
or fewer employees, SIMPLEs are retirement plans in
which employees and employers share responsibility
for contributing retirement funds.
They are commonly set up as SIMPLE individual
retirement accounts (IRAs), but also can be
established as part of a 401(k) plan.
Employers can set up SIMPLE IRAs for employees who
earned $5,000 or more in salary during the preceding
year. All individuals employed at any time during the
calendar year are considered, regardless of whether
they are eligible to participate in the plan.
Employees may make annual contributions of up to
$9,000 in 2004 and $10,000 in 2005. Employers must
match employee contributions in one of two ways.
One option is a dollar-for-dollar matching contribution
of up to 3 percent of the employee's salary.
Alternatively, employers must make a 2 percent
nonelective contribution for each eligible employee in
the plan.
SIMPLE plans may be the preferred retirement plan
for small businesses because they are easy and
inexpensive to set up and operate. The plans do not
have the participation requirements of a 401(k) and
do not require any annual compliance testing or
annual tax filings. Also, employer contributions,
whether made on behalf of the employees or the
owner, are tax deductible for the business.
Read on...SIMPLE Plans
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Greetings!
Happy Fall! We have had the pleasure of
enjoying a
week of vacation in the Berkshires this month
watching the foliage turn. Wow! We rejuvenated
ourselves with a lot of hiking on lands owned by the
Trustees of
the Reservation. The Trustees is
nonprofit group that owns 94 properties in
Massachusetts and they protect 53,000 acres. You
may be familiar with some of their well-known
landscapes like Crane's Beach or World's End in
Hingham.
Time to Share. Create a Buzz. Women's
Business Boston is a monthly resource and tool to
keep working women in touch with each other. It
provides information that working women need to
develop and grow in their businesses. The October
issue features an article written by Paula Harris
entitled Complete Your Success With
Philanthropy.
The article focuses on charitable giving through
donor-advised funds. You can sign up here to
receive a complimentary issue of the newspaper.
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| Give Your IRA a Raise |
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Refund checks from the Internal Revenue Service
were expected to average about $2,300 in 2004.
That's roughly a $100 increase compared with 2003.
Although it's nice to get a $2,300 refund check once
a year, you may be losing out on an opportunity to
help boost your retirement income. Assuming your
refund is near the average, the equivalent of $200 a
month, it's money that could be working for you.
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| Using Charitable Trusts Strategically |
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Even though times were challenging, charitable giving
reached an estimated $240 billion in 2002, a slight
increase over 2001.
Most people donate money or other assets to help
their favorite charities, but donors who plan carefully
may find that they can benefit in other ways.
One strategy, combining a charitable remainder trust
(CRT) with a wealth replacement trust, can allow
donors to give to a charity, receive income during
their lives, and provide a life insurance benefit for
their heirs.
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| Fed Rates Rise, But Consumer Rates Stay Put |
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The Federal Reserve has raised key target interest
rates three times since June. But you may not know
it by looking at the interest rates consumers are
paying. Consider how the Fed's actions have affected
mortgages and bond yields.
Home Loans - The week before the Federal Reserve's
June 30 meeting, when it raised the federal funds and
discount interest-rate targets for the first time in
four years, the average 30-year mortgage was
6.25%. Despite two more rate increases by the Fed
in the summer, 30-year mortgages had fallen to
5.75% by mid September.
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| Confidence Soars as Markets Rebound |
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In 2004, the number of workers aged 45 and older
who planned to postpone retirement plummeted to
just 13 percent, compared with 24 percent in 2003.
That should be good news, right? Sure - until the
next time the financial markets experience volatility.
Those same people may have to amend their plans
yet again.
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| Think Long Term When Considering Future Care |
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In 2000, almost half of the $123 billion spent on U.S.
long-term care for those aged 65 and older was paid
out of pocket by individuals. Only 3 percent was paid
by private insurance, while the rest of the tab was
picked up by federal and state health programs.
With out-of-pocket expenses so high - and the
national average nursing-home cost reaching $55,000
per year - individuals may want to consider
purchasing long-term-care insurance to help pay for
some of these potential expenses, as well as to help
protect their hard-earned assets.
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