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Chapter 21. No 401(k)? No Problem! > A SIMPLE Solution to the Problem - Pg. 210

No 401(k)? No Problem! 210 A SIMPLE Solution to the Problem You probably missed this on the news because it hit only the back pages of the paper, but the Small Business Job Protection Act of 1996 introduced two new retirement plans for the small-business employer. Traditional qualified plans are expensive to administer and are subject to reporting and compliance issues that many small companies are just not able to cope with. So Congress, in its wisdom (we didn't say those guys in Washington didn't have a heart), created a simple retirement account known in the industry as SIMPLE--an acronym for Savings Incentive Match Plan for Employees--that comes in two forms, a SIMPLE IRA and a SIMPLE 401(k). These plans require the employee to save, by deferring income and making a contribution to the plan, and the employer to make a matching contribution. For What It's Worth If you are self-employed and the SIMPLE plan sounds like it will work for you, you can establish a SIMPLE plan even though you have no current employees. A SIMPLE plan can grow with the business.