Self-Directed IRAs

What are the Key Benefits of Using a Self-Directed SIMPLE IRA?

The Savings Incentive Match Plan for Employees, also known as the SIMPLE IRA, is a retirement plan that small employers or even self-employed individuals can use. But what does it look like to use it, and what are the key benefits of using a Self-Directed SIMPLE IRA? One obvious benefit is that using a Self-Directed SIMPLE IRA can put retirement benefits in your hands, giving you more control. And as a self-directed investor, you can potentially use the SIMPLE IRA to make key investments in asset classes in which you may have experience, such as real estate or precious metals.

But understanding those important factors does not tell the whole story. Let us take a closer look at the specific benefits of Self-Directed SIMPLE IRA plans and why so many people turn to them.

Key Benefit #1: Tax-Deferred Contributions

We have to start with the obvious: when people choose retirement accounts like these, they do so because of the tax benefits. Specifically, a Self-Directed SIMPLE IRA allows for tax-deferred contributions. The contributions would be “excluded” from your gross income, which means that you don’t have to pay the specific taxes on that income until you withdraw these from the account. (Note: if you do withdraw the funds earlier than retirement age, then taxes and penalties may apply).

What does this mean for investors? It means that putting money aside in a tax deferred plan lowers the overall tax burden for an individual in the short-term. For many investors, that potentially means saving money in the short-term as well as the long-term because they believe they may be in a lower tax bracket upon entering retirement age. However, it’s important to consult with a financial planner to understand these keys.

Once the funds are in the SIMPLE IRA, the investor can then let them grow with the protections of a tax-advantaged retirement investing account.

Key Benefit #2: Creating an Incentive for Employees

If an investor has a small business of fewer than 100 employees, a SIMPLE IRA can be one of the most efficient ways to create a retirement incentive plan that serves as a benefit to working at your business. For many small businesses, it can be difficult to offer the large benefit packages they need to offer to hire top talent. After all, many large businesses might have financial arrangements with major retirement firms, ensuring that they have favorable terms and prices with their retirement packages. As a small business, you may not have this advantage.

But because of the third key benefit, which you are about to read, a small employer can still offer a competitive retirement package that helps attract talent.

Key Benefit #3: Low Start-Up and Administration Costs

Most employers would be happy to offer their employees some sort of retirement incentive, as long as that incentive was not prohibitively expensive. One advantage of the Self-Directed SIMPLE IRA is that it can be low cost for both start-up costs and long-term administration costs. In other words, the savings makes it possible to be more competitive as a hiring company. That makes it possible to acquire better talent and build a better business by offering employees a reason to stick around.

The SIMPLE IRA might sound more complicated than the name makes it seem, but the truth is that using one can be a simple shortcut to offering employees the retirement package they need. Interested in learning more about Self-Directed IRAs?  Contact American IRA, LLC at 866-7500-IRA (472) for a free consultation.  Download our free guides or visit us online at

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