Small Business Retirement Plans

SEP and SIMPLE plans

Welcome to the gateway of informed retirement planning for small businesses. At Next Step Wealth Strategies, we believe in guiding businesses toward effective retirement solutions, especially those with fewer than 100 employees. Enter the world of Simplified Employee Pension (SEP) and Savings Incentive Match Plan for Employees (SIMPLE) – designed precisely for this niche.

Benefits for smaller businesses

Tailored for the small: SEP and SIMPLE cater specifically to businesses with under 100 employees, ensuring that even smaller entities can offer competitive retirement plans to their teams.

Cost-efficiency: Compared to the complexities and expenses of administering a 401(k), both SEP and SIMPLE come across as more streamlined and budget-friendly options.

Employee perspective

Clarity in planning: Both these plans are straightforward, allowing employees to grasp their nuances quickly.

Convenience: Beyond just understanding, they offer a hassle-free pathway to start saving for retirement.

Uncertainties with defined contribution plans

Every investment has its set of uncertainties, with defined contribution plans like SEP and SIMPLE, the retirement benefits hinge on variables like the contribution amount, duration of accumulation, and return rates.

Detailed overview of Simplified Employee Pension (SEP)

Ease of setup: SEPs are a breeze to initiate and manage.

Employee’s role: Every employee gets their individual SEP-IRA, the vessel where employer contributions are poured.

Contribution insights: While there’s no mandatory annual contribution, any contribution made should be equitable, reaching all eligible employees.

Vested interests: Employees can access 100% of their funds immediately, though early withdrawals can invite penalties.

Employer’s responsibilities: Essentially, employers need to ensure timely contributions. The intricate administration of accounts is off their plate.

In-depth look at SIMPLE plan

Employee driven: Employees kickstart their SIMPLE journey by establishing an IRA and deciding their contribution amount.

Eligibility: This plan awaits employees who’ve clocked in earnings of at least $5,000 in any two preceding years and the ongoing year.

Watch the cap: The contribution has a ceiling, costing $14,000 or equivalent to their compensation.

Employer’s contribution: Every penny the employee contributes attracts a match from the employer, enhancing the saving potential.

Variations of SIMPLE plan

While the conventional SIMPLE plan has charm, there’s a variant – the SIMPLE 401(k). Structurally similar, its advantage lies in the flexibility it offers employers in setting eligibility benchmarks. However, it’s slightly more demanding in terms of administrative needs due to the ERISA reporting rules.


Navigating the maze of retirement planning for smaller businesses has always been more complex. With SEP and SIMPLE in your arsenal, you provide an optional benefit for your team to move toward their own financial goals. Ready to take the next step with Next Step Wealth Strategies? Connect with us today, and let’s plan for a brighter tomorrow.