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Employer Plans

Which plan is best for your company?
Compare SEP-IRA vs. SIMPLE-IRA vs. 401(k) Plans

Small business owners have a number of retirement plan options to choose from. At Saturna, we believe SEP IRA, SIMPLE IRA, and 401(k) Plans offer employers great "Value for Your Money" because of their low cost and easy operation.

The plans have a few major distinctions:

The SEP-IRA is funded by employer contributions only, and is the simplest plan to implement. The business contributes the same percentage of compensation for all eligible employees.

The SIMPLE-IRA is funded by employee elective salary deferrals and optional employer contributions. Employees have an opportunity to defer part of their salary to fund their retirement plans on a tax-advantaged basis.

401(k) Plans offer similar tax advantages on employee salary deferrals, but also offer enhanced administrative options, higher employee contribution limits, vesting schedule for optional employer contributions, available Roth contributions, plus more.

In determining which of these retirement plans is most appropriate for your business, you’ll want to consider a few key questions, including:

  1. How much, if any, responsibility do you want the business to have for contributing to employee retirement plans?
  2. What percentage of compensation do you want employees to be able to contribute each year?
  3. Do you want to require the business to contribute to the plan on behalf of employees?
  4. Do you want employer contributions to be subject to a vesting schedule?

To help you compare the answers to these questions for all your plan options, we have developed this chart. Review it to see which plan combines the features that may be most appropriate for your business.