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SIMPLE IRA

The SIMPLE IRA gives small business owners a way to offer employees an affordable and easy to set up and maintain retirement plan.

Features and benefits

  • Simple and affordable to set up
  • Allows employer to offer competitive employee benefits to attract and keep the best talent
  • Contributions are generally tax deductible to employer
  • Contributions and any earnings potentially grow tax deferred
  • Salary deferrals reduce current taxable income to employees

Key MFS advantages

  • More than 80 mutual funds to choose from, including risk/reward based asset allocation funds and target date funds based on asset allocation strategies
  • Global asset management expertise of MFS
  • Account and fund information access via the Internet and telephone
  • Customer service representatives available from 8 a.m. to 7 p.m. ET, Monday through Friday

Eligibility

  • Small business owners with 100 or fewer employees
  • Employers who want to offer a pretax salary deferral savings option, who do not maintain another retirement plan
  • Employer chooses the eligibility guidelines
    • may exclude employees who have not earned at least $5,000 in the past two years
    • may exclude employees not expected to earn $5,000 in current year

Contribution limits

  • Salary deferral of up to $12,000 for 2013 and 2014.
  • Catch-up contribution if over age 50: $2,500
  • Employer contributions either match or non-elective contribution
    • match dollar for dollar up to 3% of employee’s compensation (match may be lowered to as low as 1% for any two out of five years)
    • nonelective contribution of 2% of compensation for each eligible employee, regardless of their contributions to the plan
  • Accounts must be established between January 1 and October 1 of calendar year to be eligible for that tax year.
  • Employer contributions can be made up until the employer’s tax filing deadline (including extensions).

MFS does not provide legal, tax or accounting advice. Any statement contained in this communication (including any attachments) concerning U.S. tax matters, was not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code. This communication was written to support the promotion or marketing of the transaction(s) or matter(s) addressed. Clients of MFS should obtain their own independent tax and legal advice based on their particular circumstances.

Keep in mind that all investments, including mutual funds, carry a certain amount of risk including the possible loss of the principal amount invested.

You should recommend products based on your client's financial needs, goals, and risk tolerance.

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