IRAs are a great retirement savings option for small organization or individuals.
Many small employers, ministries, or faith-based organizations don’t have the money or experience to offer a retirement plan at all, let alone one with either a basic or matching contribution. This means you have to start your own retirement plan. Like the 403(b) or 401(k), an IRA can accommodate either traditional contributions (you save taxes now) or Roth contributions (you save taxes later).
How could an IRA benefit your employees?
For most young workers and some older ones (for example ministers that take advantage of Minister’s Housing Allowance to reduce their taxable income), a realistic and tax-free choice is to start a Roth IRA or a Roth 403(b). Contributions aren’t tax-deductible, but your employees can withdraw the principle from them tax free. As long as they wait until they’re age 59 1/2 to take withdrawals, earnings are tax-free too.
Some of the perks of an IRA include:
-
IRAs have much lower plan costs and annual fees.
-
Anyone, such as volunteer staff or individuals, can join an IRA.
-
IRA owners may withdraw from their account at any time, although a 10% tax is applied to anyone who withdraws before the age of 59 1/2.
-
Most IRAs offer a wider range of investment choices than employer plans.
Interested in knowing the difference between an IRA and a 403(b) account? Click here.
If you’d like to discuss setting up an IRA, consult one of our financial advisors by clicking the button below: