woessner[at]gmail.com wrote:

- quote -

Doesn't a 401k have different rules for "owners" or employees with
sigificant incomes? This would be an issue to look into. I have read
parts of our 401k documents which talk about contribution limits for
employees at an executive level. My emplyer is a 3000+ employee and
multi billion dollar software company... this may or may not apply to
smaller employers.

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I can tell you what's in it for your employees. The employee
contributrion limit for 401ks is 50% higher than for SIMPLE IRAs ($15K
vs. $10K). The 401k also allows for the possibility of Roth
contributions. However, by switching to a 401k, your employees will
lose the early withdrawal penalty exemptions that the IRS offers to IRA
holders. They'll also lose the open field of investment opportunities
offered by the IRA.

As for what's in it for you, I can offer up 2 suggestions. The 401k
offers you a little more flexibility with respect to the employer
contribution. Instead of the 3% match or 2% contribution you're
required to do for the SIMPLE IRA, you could do nothing.
Unfortunately, if you don't implement a "Safe Harbor" 401k (4% match or
3% contribution), you'll have to do annual discrimination testing,
which can be expensive.

Also, to your employees (both current and perspective), I think a Safe
Harbor 401k with the Roth option is a MUCH more attractive retirement
plan than a SIMPLE IRA. At least, it would be to me.

--Bill

For the last 6 years or so, we've offered our employees a SIMPLE
plan. My business partner got a call last week from our finance guy
who wants to switch us to a 401K.

I suspect he's after the higher maintenance fees -- more commission
in his pocket.

I've yet to setup an appointment with him to give his pitch. I'll start it
off with one simple two part question to him: "What's in it -- (a) for
us (b) for you ?"

Any business owners out there been through this? I need to
research, before our meeting so I've got some points for
discussion/debate -- why would we want to switch? Why
would our advisor want us to switch?

Thanks in advance.