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IRA-Based Plans

With IRA-based arrangements such as SEP plans and SIMPLE IRA plans, contributions are made to individual retirement arrangements - or IRAs - established in the name of each eligible plan participant. Because the plan participants, and not the plan sponsor, have ultimate control of the IRAs, the plan sponsor typically does not shoulder ongoing fiduciary responsibility with respect to the IRA.

Types of IRA-based plans

Common Advantages

  • Simplicity
  • Lower Cost
  • Minimal Administration
  • Less Fiduciary Responsibility

Potential Disadvantages

  • Less Design Flexibility
  • No Vesting/Loans
  • Lower Salary Deferral Limits
  • Unrestricted Access to Benefits