Clinic I work for only offers Simple IRA

[Aapl]

Hi everyone. New doc here seeking advice.
The company I work for does not offer a 401k and only offers a Simple IRA (which I believe you can put up to 12k into) with 3% matching. Is this a good option to pursue? I'm about to make my first contribution to a retirement acct and not sure if I should take this option or put into a traditional or roth IRA. Thanks!

[Peds]

well you cant deduct tIRA
and you cant cont to rIRA
and simple is one of the worst options. but its all you got.

talk to employer to change plans.

[runfast00]

We have a SIMPLE IRA at our private practice. Although it is not a great option, it is something.

I do some side 1099 gigs and have an i401K as well that I give the max possible from side income.

My biggest hurdle with SIMPLE is transferring balance out to i401K each year so that my Dec 31 balance is zero. That way I am eligible if I want to do a backdoor Roth

[jfoxcpacfp]

You can make up to a $13,500 SIMPLE contribution if < age 50 and an additional if you are age 50+. I’ll be honest - that’s the plan we have always used in our office and I doubt I’ll change anytime soon. Why? Because I don’t believe anyone but myself would max out a 401k and it’s just not worth the cost for me and, maybe, my 2 partners (1 in CPA and 1 in financial planning). Better tp simply build up a taxable account.

Yes, you need to participate - WTH not?1? You get a tax deduction for your contributions and your employer will match 3% (not any different from a safe-harbor 401k. In addition, you can use any custodian you choose with the investments you choose.

2 yrs from when you first participate, you are free to do whatever you want to the account without the onerous 25% penalty. Of course, you’ll still be penalize 10% for early w/d, same as other accts. Find some SE income and open a solo-k during that time. OR do a backdoor Roth and pay pro-rata taxes, which I don’t see as a really bad thing (you’re only paying taxes on your TIRA withdrawal before you retire and begin RMDs - but you’re also putting $$ in and allowing it to grow tax-free. Not a big deal in the huge scheme of your retirement planning and maybe even a plus (such as right now).

I did not post this response to say that a SIMPLE is superior to a 401k. But, it has merit and a 401k is not OSFA for a small employer. Take advantage of the tax deduction today - for sure - and then decide what to do with your SIMPLE savings in 2 yrs. It’s 100% up to the employee to manage - no employer limitations at that point.