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'Simple' Retirement Plan Highlights

-- Plan requires no discrimination testing: Employees need not participate for business owner to defer up to $6,000 plus 3% match per year.

-- Company must have no more than 100 employees and cannot use any other retirement plan in the same year.

-- Employer has no fiduciary responsibility for employee investments.

-- Owner must either make mandatory match of 3% of compensation for participating employees or contribute 2% of compensation for all employees, whether they participate or not.

-- Plan can be a 401(k) or in IRA form. The IRA allows owners to reduce the match in two out of five years; the 401(k) does not. 401(k) owners would be allowed to borrow from the plans, which would cost more to administer than an IRA.


Updated June 14, 1997 by bwwebmaster
Copyright 1996, Bloomberg L.P.
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