Whether you are considering establishing a new 401(k) plan or converting your existing SEP or SIMPLE IRA plan, we'd be happy to discuss the advantages of a 401(k) and the potential for both cost savings and tax benefits for your clients. While SEP and SIMPLE IRAs offer small business retirement plan solutions, the benefits of a 401(k) are clear:
More flexibility
Higher contribution limits for all
Opportunity to maximize contributions
Roth contributions
Both employee and employer can contribute
SEP/SIMPLE IRAs can have high withdrawal penalties.
Loan availability allows employees access to their assets prior to retirement
Due to IRS rules, timing is critical when considering replacing a SEP or SIMPLE IRA with a 401(k) plan. These rules include:
You CANNOT have a SIMPLE Plan and a 401(k) Plan in effect during the same calendar year.
SIMPLE IRA plans must be maintained for a whole calendar year. Once started, you must continue your SIMPLE IRA plan for the entire calendar year, funding all contributions promised in the employee notice.
For a SIMPLE IRA to be terminated at year-end, participant notices must be sent to participants at least 60 days in advance (by November 2).
