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How do I know if a SIMPLE IRA is right for me?

If you are a small business owner or a self-employed person and you haven't set up any other type of work-related retirement plan, consider the SIMPLE IRA. Unlike profit-sharing or 401(k) plans, SIMPLE IRAs are easy to set up and easy to administer.

This is especially true if you work alone but aspire to run a bigger business. Adding even one full-time employee to other plans, like a SEP IRA, can be a big hassle. Not so with a SIMPLE IRA. Keep in mind that the SIMPLE IRA's contribution limits are much lower than those for an SEP IRA ($11,500 for the SIMPLE in 2010, versus a maximum of $49,000 for the SEP if you're younger than 50), which can affect your ability to save enough for a comfortable retirement. To top of page