IRAs For Small Businesses  
 
You and your employees need to know that the hard work you perform will be rewarded.

One way to see your hard work pay off is by maintaining a retirement plan for your business.

SEP and SIMPLE IRA Plans offer low-cost alternatives to qualified employer-sponsored plans, such as 401(k)s and Profit Sharing Plans. Both SEP and SIMPLE IRA Plans are convenient and relatively easy to administer, and each offers you the benefits of tax deduction and tax deferral.
 
SEP vs. SIMPLE IRA
 

 
Comparison SEP IRA SIMPLE IRA
Employer Size No limit 100 or fewer eligible employees
Establishment Deadline Tax filing due date, plus extensions October 1st of each year
Annual Employee Salary Reduction Contributions Not available 100% of compensation or $10,500 for 2008, $11,500 for 2009 Participants age 50 or over may also make catch-up deferral contributions of $2,500 in 2008 and 2009 for a total of $13,000 in 2008 and a total of $14,000 in 2009.
Annual Employer Contributions 0% to 25% of individual's compensation or $46,000 for 2008 and $49,000 for 2009.
Required match of 3% of compensation (employer may elect a lower limit of at least 1% in any 2 of 5 years), or nonelective contribution for all eligible employees of 2% of compensation.
Vesting 100% immediate
 100% immediate
Investment Discretion Self-directed accounts only Self-directed accounts only
Combination of Plans Employer may operate any other plan in the same year within funding and coverage limits. Employer may not operate any other plan in the same year. Employees may have IRAs.
 
Morgan Stanley Smith Barney and its Financial Advisors do not provide tax or legal advice, are not “fiduciaries” (under ERISA, the Internal Revenue Code or otherwise) with respect to the services or activities described herein, and this material was not intended or written to be used for the purpose of avoiding tax penalties that may be imposed on the taxpayer. Individuals are urged to consult their tax or legal adviser before establishing a retirement plan or to understand the tax, ERISA and related consequences of any investments made under such plan.