Question
Pauls Paint-N-Plumbing, Inc. Case Scenario: Pauls Paint-N-Plumbing, Inc. (3P) has been in business for 33 years. Paul is retiring and passing the business on to
Pauls Paint-N-Plumbing, Inc. Case Scenario: Pauls Paint-N-Plumbing, Inc. (3P) has been in business for 33 years. Paul is retiring and passing the business on to his two children in equal shares to manage and operate according to their skills and experience. The children, Paula and Prescott, decide to adopt a retirement plan for both current and future employees in an attempt to attract and retain talent. They have decided to adopt a SIMPLE IRA, funded by both employee and employer contributions. Answer the following questions: 1. What are the advantages and disadvantages of offering a SIMPLE IRA over a qualified plan, such as a 401(k) plan? 2. If Philip (age 55), a long-time employee of 3P, wants to contribute both to the SIMPLE IRA at work and to a traditional IRA, what are the limits on his contributions and deductibility regarding the traditional IRA?
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