The challenge of having a proper retirement plan can be a quite complex process. Today, there are various different plans and retirement programs. These retirement concepts offer different benefits and pathways towards the financial stability in the aging process. One common plan that we will analyze in this article is the so-called SIMPLE IRA. The SIMPLE IRA plan is a retirement plan that in most cases is used by small companies and enterprises. The main reason why many small business use this retirement plan is the broad advantages of the model. The first and foremost, is the benefit of having an easy setup system. The plan is based on short number of documents which are easy to fill up thus making the application process quick and simple. Moreover, it is important to emphasize that some financial enterprises and brokers can initiate the whole plan through email or phone. The second advantage is that the SIMPLE IRA is designed for small companies only. Usually, the this type of IRA plan is usually offered for business that employ less than 100 workers. Moreover, the plan has a limitation which makes unavailable for the big companies and corporations.
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However, one negative aspect of the SIMPLE IRA retirement plan is the possible penalties. To be more specific, in case a user decides to withdraw money before the retirement age, there is a high possibility of penalty fees as high as 25 % of the total balance. Moreover, if an individual decides to withdraw funds in the first two years of joining the IRA plan, this 25 % fee penalty will be activated. An additional challenge of the SIMPLE IRA is that a participant cannot transfer funds into any other type of account. One notable example is in situations where a worker wants to change employers during the first two years of the plan. In that case, the user will not be able to transfer the funds into a new 401k account without some fees. A person might get charged with the 25 percent early distribution penalty which would significantly decrease the retirement savings. The SIMPLE IRA plan represents a solid retirement concept for many employees and companies as well. It is safe to say that is a win-win situation for both parties. That is why, SIMPLE IRA retirement plan is perfect for employers and employees that have a stable and long-term professional relationship.