Best Simple IRA Plan Providers


2018 Top Simple IRA plan firms. Best Simple IRA providers to open safe brokerage firm investment retirement account with low fees and great selection of mutual funds.



Top Simple IRA Plans Fees


Brokerage Broker
Rating
Simple IRA
Inactivity Fee
Simple IRA
Annual Fee
Simple IRA
Closing Fee
Ally Invest
Ally Invest rating

$0 $0 $50
TD Ameritrade
TD Ameritrade rating

$0 $0 $0
Etrade
Etrade rating

$0 $0 $0


Etrade rating

E*trade

Etrade SIMPLE IRA Plan Review


Whether you are a seasoned pro or a just beginning to think about investing, looking into one of the top online brokerage firms is a wise decision. Etrade started its discount trading site over 30 years ago and has been offering consistently good value for long term investors ever since. Here is a look into what sets Etrade apart.

Read full Etrade SIMPLE IRA Review


Promotion link

At E*TRADE, get $6.95 trades + 65₵ per options contract.




Ally Invest rating

Ally Invest


Ally Invest SIMPLE IRA Plan Review


With $4.95 stock and ETF commissions, Ally Invest is one of the least expensive online brokers. Throw in 65¢ option contracts, and this company is certain to attract derivate traders, too. Ally Invest is one of the few brokers to also offer forex trading. A basic web-based platform is available for beginners, while a more advanced desktop system is provided to active traders. A free mobile app helps traders follow the market, while S&P Capital IQ stock reports are also available at no cost.

Read full Ally Invest SIMPLE IRA Review


Promotion link

Up to $3,500 cash bonus + commission free trades for new accounts.




TD Ameritrade rating

TD Ameritrade

TD Ameritrade SIMPLE IRA Plan Review


Traders who need advanced technology but don't want to pay for it should consider TD Ameritrade. The broker has a sophisticated website plus two desktop platforms. All are available with no frequent trader requirements. Traders can use three different mobile apps, one of which has very advanced charting capability. These platforms are also free to use. To top it off, TD Ameritrade clients can buy and sell 296 commission-free ETF's and 2,000+ commission-free mutual funds.

Read full TD Ameritrade SIMPLE IRA Review


Promotion link

Trade free for 60 days + get up to $600.





About SIMPLE IRA Account


A Simple IRA is a retirement program that is easy-to-administer and salary-deferred. It is for employees with an employer match option. Consider a SIMPLE IRA if your business has steady income and your employees want to make contributions to a retirement plan. Employers with 100 or fewer eligible employees who did not maintain another retirement plan are eligible to establish a SIMPLE IRA.


Contributions

Each eligible employee can decide whether or not to participate and how much to contribute. Employer contributions are mandatory. Employee contributions are optional. Employees may contribute up to 100% of compensation.

The employer matches employee salary contributions dollar-for-dollar of up to 3% of compensation (this can be reduced to 1% in any two out of five years), or makes a non-elective contribution of 2% of compensation for all eligible employees (including those who decide not to contribute for themselves). The compensation cap for determining employer contribution amounts is $245,000.


Withdrawals

Funds cannot be removed from the SIMPLE IRA until it has been established for at least two years. Withdrawals from a SIMPLE IRA after two years are still subject to federal income tax and/or a tax penalty.


Key Benefits of a Simple IRA Plan

  • Simple administration and low administrative costs. No maintenance or account fees
  • No employer tax filings
  • No IRS contribution testing
  • Employees can make contributions
  • Does not limit eligibility or employee access to funds


Eligibility requirements for the plan sponsor

This plan is generally suitable for businesses with 100 employees or fewer. It's usually available when other tax-favored plans are not permitted.


Setup and funding

A SIMPLE IRA must be established prior to October 1. The employer contribution (match or non-elective) must be made by the employer's tax return due date, plus extension. All contributions are reported in the tax year received on tax form 5498.


Savings IRA vs. Brokerage IRA


Deciding to open an Individual Retirement Account (IRA) is a big decision. For many investors, it's the first significant investment they will have. Saving for retirement should be a key component of everyone's financial plan. An IRA is an account set up for the sole purpose of accumulating money tax-deferred for retirement income needs.

But deciding to open an IRA is only the first step. An investor must decide where to invest their contributions. An IRA can be opened with many financial institutions, but the investments options offered are different. The two main options are savings IRAs and brokerage IRAs. Individuals can also have IRAs of both types if they have sufficient funds to meet minimum initial investment requirements.

Savings IRAs are opened with banks, credit unions, or savings and loans. Investments in these institutions are typically Certificates of Deposit (CDs) or some other sort of savings account. Some banks offer fixed annuities, which for the purpose of this article, are like CDs. IRA contributions are used to purchase CDs with certain maturity dates and rates of interest. These are identical to CDs not held in an IRA except the interest on IRA CDs is tax-deferred.

Savings accounts are almost always insured and guaranteed against loss of principal by the federal government. Banks and savings and loans are insured by the Federal Deposit Insurance Corporation (FDIC). Most credit unions are insured by the National Credit Union Share Insurance Fund (NCUSIF).

Brokerage IRAs are set up with institutions that offer stocks, bonds, mutual funds, exchange-traded funds (ETF), options, commodities, futures, options on futures, and other variable-return investments. These investments don't offer a fixed return. They rise and fall in value daily. Neither the principal nor the earnings are guaranteed or insured by the government.

Offsetting the lack of safety is the possibility that these investments will earn higher rates of return. Equity investments have a long track record of outperforming fixed-rate investments over the long term. A diversified portfolio can lessen the risk by spreading it to many different stocks, ETFs, or mutual funds and still produce a better rate of return than a savings account.


Advantages of Savings IRA


Low cost. Commissions or fees are not charged to purchase CDs. Early withdrawal penalties can be assessed but are usually only a month or two of interest. Custodial fees are often waived for IRA accounts if minimum balances are maintained or other criteria is met.

Low Initial Investment. Savings IRAs can be opened with as little as $100. Many banks offer monthly automatic saving options that allow individuals to add small monthly amounts to their IRAs.

Safety. Savings IRAs are federally insured up to $250,000 per account. Investors with more than $250,000 can insure the difference with another IRA account at a different bank.

Predictable. Rates are guaranteed for the term of a fixed-rate CD. Variable rate CDs change rates periodically, often every 6-12 months. Rates for standard savings accounts may change depending on prevailing interest rates, but are relatively stable. Knowing what the return on a savings IRA will be many years in the future makes it easy to plan saving strategies and know how much money will be available on a specific date, especially near retirement.

Convenience and Simplified Recordkeeping. Savings IRAs can be opened at one's neighborhood bank. Money can easily be transferred between regular accounts and IRAs, often through the bank's website. Statements come quarterly, semiannually, or yearly, depending on the terms of the CD.


Advantages of Brokerage IRA


Potentially High Rates of Return. Equity investments fluctuate in value, but over time they have produced greater returns than fixed-rate investments.

Diversification. Investors often have a desire for higher returns or want to own stock in a particular company. They also may want to limit risk by owning numerous types of investments. This can be accomplished with diversifying a portfolio into individual stocks, mutual funds, ETFs, bonds, commodities, options, and/or other investments. Real estate can be owned in a brokerage IRA through ETFs that invest in Real Estate Investment Trusts (REITs).

Competition Can Mean No-Cost or Low-Cost Investing. Many online discount brokers offer no-commission trades on a fixed number of trades when investors open new accounts which allows investors creating portfolio for free (TD Ameritrade is a good example). Additionally, most online brokers offer commission rates far lower than was common before discount brokers appeared in the 1980s. Some brokerages offer commission-free investing in their proprietary funds and ETFs.

Access to Advisory Services. Most brokers offer financial planning and advice to IRA customers, sometimes free or for a low fee. These services can be a real benefit to those with more complicated financial situations. The best advisors and services may improve an investor's overall situation, but no guarantees are given.


Disadvantages of Savings IRA


Low Returns. For the past decade, interest rates have been at historical lows, approaching zero for several years. This meant multi-year CDs yielded barely 1-2%. When inflation is greater than available interest rates on CDs, the CDs lose purchasing power. Inflation has been low during the past decade but still generally higher than the rates available on all but the longest-termed CDs.

Limited Choices. Time deposits and regular savings accounts are the only IRA investment options offered by most banks.


Recommended Articles


Major stock brokers
OneUp Trader review
Direct access brokers list


Disadvantages of Brokerage IRA


High Risk. A brokerage IRA investment can lose as much as 100% of the principal. Relying on an individual broker for advice may increase volatility and risk even more than normal and lead to severe underperformance of the portfolio.

Higher Costs. Commissions are usually charged on stock, ETF, bond, option, or futures purchases. Many mutual funds charge front-end or back-end sales charges. Brokers and advisors are also eager to manage larger accounts in exchange for an annual management fee. Other administrative fees may be charged as well as annual IRA custodial fees.

More Paperwork and Confusion. Statements are often sent monthly and may not be easily comprehended by new investors. Certain investments might not be fully understood by account owners, which may lead to losing money or underperforming. Account applications are longer and require more personal information.


Mutual Fund vs Savings IRA Conclusion


No single type of IRA is right for everyone. Savings IRAs are best suited to individuals who want less risk, are new to investing and wish to keep things simple, or have small amounts of money available to save. They are also good for those nearing retirement age who want the stability and certainty of a fixed rate of return on their investments.

Brokerage IRAs are better for young workers who have a longer time frame and can accept higher risk to earn possibly higher returns. They are also good for those who want diversification. Paradoxically, brokerage IRAs appeal to investors who want a lot of hand-holding and personal advice as well as those who want to manage their account entirely by themselves. Savvy investors may choose to have both types over the course of their investing careers.


Updated on 3/15/2018.