Simple IRAs Simplified with WealthRabbit

As a CPA, I’m often asked how to save money on taxes. As a CFP®, I’m often tasked with coming up with plans to save for retirement. There are many great savings and tax beneficial retirement plans out there: IRAs, 401ks, Simple IRAs, and Cash Balance Plans to name a few. Each of these vehicles is right for certain people and businesses.

There are a lot of fintech companies that focus on 401ks, but there is currently not a good solution on the market which provides small businesses with a modern, intuitive, user friendly Simple IRA solution. That’s why we founded WealthRabbit. We want to provide the best Simple IRA platform for small businesses so that they save for retirement, attract and retain talent, and spend less in taxes.

What is a Simple IRA?

A Simple (Savings Incentive Match Plan for Employees) IRA is a retirement plan for small employers with generally 100 or fewer employees. It allows employers and employees to contribute money into an employee’s individual retirement account (IRA). The employee and employer get a tax deduction when they put the money in the IRA, and the money grows tax free until it is taken out of the account, hopefully at retirement.

Why a Simple IRA?

There are two groups of people that benefit from a Simple Plan: Employees and Employers. Employers, and their small business owners, benefit because they get a tax deduction for the money they put into their accounts as well as their employees. It allows the business owner to save for retirement and defer taxes. For the employees, not only do they get to save for retirement, but they also are entitled to receive a 3% match of the funds they contribute from their employers. This employee benefit is a great way to attract talent to your workforce.

What are the Benefits for Employers?

Employers get a tax deduction for any company contributions into a Simple IRA. There are also a tax credits to help offset the cost of the plan: the Retirement plans startup costs tax credit.

What Companies are Eligible to Start a Simple IRA Plan?

Any company with 100 or less employees can start a Simple IRA plan.

What employees are eligible to contribute to a Simple IRA?
Generally any employee reasonably expected to make $5,000 in the calendar year are eligible to participate in the plan.

What is the cost to employers?
Unlike a 401k, the beauty of a Simple IRA plan is there are no continuous filings with the IRS. Once established, you must maintain records of your Simple IRA plan in accordance with the IRS and Department of Labor in case of an audit. WealthRabbit takes care of all this compliance for you at a fraction of the cost you would pay to maintain a 401k.

In addition to compliance, an employer must normally match up to 3% of a participating employee’s salary.

Why WealthRabbit?

We started WealthRabbit because we saw a major need in the market for a Simple IRA solution that would help our customers set up and maintain their Simple IRA plans easily and efficiently.

The benefits of using WealthRabbit:

• Easy to Setup: Setup your employer account all online in about 10 minutes
• Easy to use: You can make your contributions in a few clicks, set up on autopilot, or connect directly with our connected payroll providers to make your deposits quickly and efficiently.
• Low-Cost, High-Grade Investments: WealthRabbit has partnered with Blackrock to offer customized portfolios based on the employee’s risk tolerance.
• Advanced Security: WealthRabbit protects sensitive data with industry-leading security protocols

If you’re interested in starting a Simple IRA plan with WealthRabbit or moving your current Simple IRA Plan over to WealthRabbit, visit our website www.wealthrabbit.com to learn more and sign up.

-Jason Ackerman, CPA, CFP®, CGMA