The Savings Incentive Match Plan (SIMPLE) IRA plan is easy to establish and administer for new or small practices. It provides an effective way for the doctor to tuck away some money for retirement while considerably reducing the tax burden. While not as heavy duty as the 401(k) it still lets the doctor take advantage of tax saving opportunities at a very low cost.
It has to be established by October 1st of the year for which contributions will be made in it. It is available to small practices of up to 100 employees and is easy to set up by adopting one of two forms: either a SIMPLE IRA prototype, or an individually designed plan document.
The employer is required to contribute to the plan each year by matching employee contributions of up to 3% of compensation, or of up to 2% of non-elective contribution for each eligible employee. Employees may elect to contribute, and employees are 100% vested in the plan from day one.
In my practice I recommend this type of plan as a bare minimum to every doctor because of its attractive features, ease of administration and minimal costs.