There are roughly three different kinds of IRA plans you could set up for your small business. They are very similar to each other but have a few different wrinkles. Each should be easy to administer as the small business owner. The three most common are:Payroll deduction IRA. Any employer with more than one employee can set up a payroll deduction IRA. You arrange with the employee to make a payroll deduction and then send the contributions to the IRA. There is no minimum requirement, but maximum contributions per participant are $5,500 for 2016 (or $6,500 if age 50 or older).

Simplified Employee Pensions (SEP). This plan differs from the payroll deduction IRA in that you, the employer, make a contribution. The employee does not. You also will decide how much to contribute each year. If you choose the SEP, then you must contribute a uniform percentage of pay for each employee. The maximum you can contribute is $53,000 or 25% of pay, whichever is lesser.

SIMPLE IRA Plans. If you have 100 or fewer employees, you can set up a SIMPLE IRA. The employee can make deductions and employers must match a certain percentage of the employee’s contribution. The maximum an employee can contribute is $12,500 in 2016 (with up to an additional $3,000 if age 50 or over).;
, The financial institution you contract with will act as the trustee to your plan. It will generally be responsible for depositing your contributions, issuing annual statements, making investment decisions, and submitting required filings to the IRS.You can find institutions by asking other small businesses that have IRA plans if they would recommend their service provider.
You can also perform an Internet search. Type “small business IRA provider” into your favorite search engine.
 You might already know which IRA plan you want. However, you should still talk the options over with the financial professional, who may have advice.


You should also talk with your tax professionals and attorneys ahead of time to fully understand what consequences adopting a retirement plan will have.
 You can typically start an IRA plan by completing a short form with the financial institution who will act as your service provider. You should call ahead of time and ask what information you should bring.


If you are creating an SEP, then you will need to fill out Form 5305-SEP, which is only two pages.Get copies of all completed paperwork for your records.
 After setting up the plan, you need to notify your employees. For example, if you set up an SEP-IRA, then you will give each employee a copy of Form 5305-SEP (or equivalent form) and instructions. You also must provide employees with a written statement, which explains the following:Employees who participate will receive a written report of their employer contributions by January 31 of the following year
The SEP-IRA may provide different rates of return and have other terms than other IRAs the employee has
The SEP administrator will provide a copy of any amendment within 30 days of the date it is effective

, You should always monitor the trustee to make sure that it is fulfilling its duties. You should always review any communication or report from the trustee and raise questions in writing. If an employee raises a question about the plan, be sure to follow up with the financial institution for the employee.


Also make sure that the administrative fees continue to be reasonable.If fees are increased, ask for an explanation in writing.
 Your business might grow and change. For example, you might have an SEP plan, which is only available if you have 100 or fewer employees. If you grow too large, you might need to switch to a different retirement plan. Contact your financial institution service provider and discuss your options.If you decide to terminate, then you should contact the financial institution and tell them that you will not make your next contribution and want to cancel the agreement. You should also notify your employees that the plan will be discontinued.
Identify the different types of IRA plans.
Find a financial institution that administers IRAs.
Meet for a consultation.
Complete the paperwork.
Give your employees information.
Monitor the trustee.
Terminate the plan, if necessary.
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