Tools and Resources

Retirement Services Case Study

Case in Point: ADP Simple IRA

Client:

 Home Grown Gardens*

Business:
Employees:
Ownership: 

Small retail plant nursery, serving local homeowners
5 full-time, 2 part-time
8 years, by Hank McGregor

Situation:

Hank loves gardening and sharing his green thumb secrets with neighbor customers more than handling some of the administrative tasks of his garden center business. That's why he signed on with ADP Payroll last year, to relieve some of the administrative burden.

But, in the past 18 months, four new developments have broken ground in this metro bedroom community. Business is booming, and more is on the way. Hank is worried about losing his employees to other new businesses springing up nearby. To compete, he can raise wages some, but he currently offers no benefits. The whole situation is making him take stock of his own personal situation -- he just turned 45 last month and has no nest egg money tucked away for retirement.

Solution:

ADP SIMPLE IRA
For business owners (who don't maintain any other retirement plan) with no more than 100 employees who received at least $5,000 in compensation for the preceding year.

Less administration and government reporting than a 401(k), with no participation requirements. Easy to convert to a 401(k) plan.

Value Added:
  • Savings for employers through tax-deductible matching contributions and tax credit of $1,500 (over three years) for establishing the plan
  • Easy way for employees to save for retirement through payroll deductions (ADP Payroll clients)
  • Withdrawals available at any time, likely subject to tax penalties if under 59 1/2 years of age

 

* This case study is presented for illustrative purposes only. The hypothetical situation above represents a composite of the typical challenges that face many of ADP's clients for this product. All client and company names are fictitious and any relation to actual names is coincidental and is not intentional.

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