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Mutual Funds and Mutual Fund Investing - Fidelity Investments

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Understand retirement planning options that help you keep more of what you earn, while also investing in your future.

Help take the guesswork out of which plan could be right for you with a 5-minute quiz

Explore our plans, compare plans, watch a video.

Self-Employed 401(k)

A 401(k) plan for a self-employed individual with no employees other than a spouse.

Easy-to-maintain plan for a self-employed individual or small-business owner, with fewer than 5 employees 1 .

A low-complexity plan for businesses with fewer than 100 employees looking to offer a retirement benefit.

Fidelity Advantage 401(k)

An affordable plan for small businesses looking to offer a 401(k) for the first time.

Fidelity 401(k)

An industry-leading 2 , customizable 401(k) that supports existing plans $1M and up.

Investment-only account 3

A brokerage account for those who have their own separate retirement plan document.

Whether it’s just you or you and your employees, we have a retirement plan that’s right for you. Take a look at how they compare and find one that fits your needs.

Already have a 401(k) plan with another provider? Learn more about the support and value we can deliver with a Fidelity 401(k).

If you have a separate retirement plan established and you’d like to invest the assets in a Fidelity brokerage account, you may be interested in an investment-only retirement account. 3

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More resources for your small business

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$0.00 commission applies to online U.S. equity trades and exchange-traded funds (ETFs) in a Fidelity retail account only for Fidelity Brokerage Services LLC retail clients. Sell orders are subject to an activity assessment fee (historically from $0.01 to $0.03 per $1,000 of principal). Other exclusions and conditions may apply. See Fidelity.com/commissions for details. Employee equity compensation transactions and accounts managed by advisors or intermediaries through Fidelity Institutional ® are subject to different commission schedules.

Investing involves risk, including risk of loss.

No account fees or minimums to open Fidelity retail IRA accounts. Expenses charged by investments (e.g., funds, managed accounts, and certain HSAs), and commissions, interest charges, and other expenses for transactions, may still apply. See Fidelity.com/commissions for further details.

Fidelity does not provide legal or tax advice. The information herein is general in nature and should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific situation.

Fidelity Brokerage Services LLC, Member NYSE, SIPC , 900 Salem Street, Smithfield, RI 02917

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Who is the plan for?

SE 401(k) : Self-employed individual or business owner with no employees other than a spouse.

SEP IRA : Self-employed individual or small business owner, primarily those with only a few employees. 1

Fidelity Advantage 401(k) : Small and medium- sized businesses looking to offer a 401(k) for the first time.

SIMPLE IRA : Self-employed individuals or businesses with 100 or fewer employees.

How do contributions work?

SE 401(k) : Employers may contribute up to 25% of compensation, up to a maximum of $69,000 in 2024 ($76,500 if age 50 or older).⁵ Employees may contribute up to $23,000 for 2024 ($30,500 if age 50 or older).⁵

SEP IRA : Employers may contribute between 0% and 25% of compensation up to a maximum of $69,000 for 2024.⁵ Each eligible employee must receive the same percentage.

Fidelity Advantage 401(k) : Employers make matching contributions, up to 4% of the annual gross compensation of all employees.⁴ Employees may contribute up to $23,000 for 2024 (catch up contributions available).⁵

SIMPLE IRA : Employers contribute either a matching contribution of 1, 2, or 3% or a non-elective contribution of 2%. 7 Participants may contribute up to 100% of compensation with a maximum of $16,000 for 2024 ($19,500 if age 50 or older). 8

Who can contribute?

SE 401(k) : As someone who's self-employed, you can contribute as both employer and employee.

SEP IRA : Only the employer can contribute.

Fidelity Advantage 401(k) : Both employees and employers can contribute.

SIMPLE IRA : Both employees and employers can contribute.

What about fees and tax credits?

SE 401(k) : There are no account fees and no minimum to open an account, $0 commission for online US stocks and ETF trades.⁶

SEP IRA : There are no account fees and no minimum to open an account. $0 commission for online US stocks and ETF trades.⁶

Fidelity Advantage 401(k) : There are no additional management fees or, with limited exceptions, fund expenses beyond the $300 per quarter fee.

SIMPLE IRA : There are no account fees and no minimum to open an account, $0 commission for online US stocks and ETF trades.⁶

When can withdrawals be made?

SE 401(k) : You can take a withdrawal once you’ve had a triggering event, such as disability, plan termination, turning age 59 ½ or older, and a few others. However, some withdrawals may incur a 10% penalty. 4

SEP IRA : You can withdraw at any time, but a 10% penalty may apply if you're not yet age 59½. 4

Fidelity Advantage 401(k) : You can take a withdrawal once you’ve had a triggering event, such as disability, plan termination, turning age 59½ or older, and a few others.⁴ However, some withdrawals may incur a 10% penalty. In the event of certain types of financial emergencies, you may be able to take a hardship withdrawal.

SIMPLE IRA : You can withdraw at any time, but a 10% (or 25% if within the first two years of participation) penalty may apply if you're not yet age 59½. 4

Important Information Virtual Assistant is Fidelity’s automated natural language search engine to help you find information on the Fidelity.com site. As with any search engine, we ask that you not input personal or account information. Information that you input is not stored or reviewed for any purpose other than to provide search results. Responses provided by the virtual assistant are to help you navigate Fidelity.com and, as with any Internet search engine, you should review the results carefully. Fidelity does not guarantee accuracy of results or suitability of information provided.   Keep in mind that investing involves risk. The value of your investment will fluctuate over time, and you may gain or lose money.   Fidelity does not provide legal or tax advice, and the information provided is general in nature and should not be considered legal or tax advice. Consult an attorney, tax professional, or other advisor regarding your specific legal or tax situation.  Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917  796549.1.0

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• Open an Account

A Savings Investment Match Plan for Employees (SIMPLE IRA) is an easy and low-cost way to set up a retirement program for self-employed individuals and small businesses with 100 or fewer employees. Eligible employees can fund their own SIMPLE IRA accounts through regular salary deferrals and Employers make additional contributions.

If you're a new employee click here to open a Simple IRA .

If you are a business owner/employer you can open your new plan by downloading the forms below .

What are the benefits of a SIMPLE IRA?

For employers:.

• A way to contribute to your own retirement easily and regularly, and help your employees contribute to theirs
• A low-cost plan funded mainly by employees
• Business expense deductions for employee contributions
• Easy administration with no tax filing
• Retirement planning tools and resources
• 24/7 service and support.

For Participants:

• Employer-matched contributions of up to 3% of annual compensation
• Tax-deferred earnings
• Pre-tax contributions for participants

You can also view additional SIMPLE IRA information here.

Account Pricing

There is no fee to open or maintain an account at Schwab.

• Minimum opening deposit: $0
• $0 account open or maintenance fees. Other account fees, fund expenses, and brokerage commissions may apply 1 .
• Trade commissions: $0 per online listed equity trades; 2  $0 per Schwab ETF online trade in your Schwab account 3

Find out more about our  fees and minimums .

Related Questions

Have questions about this account? Here are responses to some of the most common questions we hear. If you have a specific question that's not answered here, please call us at  800-435-4000 .

Get detailed instructions on how to Establish Your Plan, or call us at  800-435-4000  if you have questions.

A SIMPLE IRA may be appropriate for businesses with 100 or fewer employees seeking a low-cost plan that's easy to administer and maintain. If you are self-employed or own a business with 100 or fewer employees, you are eligible to establish a SIMPLE IRA plan, as long as it is the only retirement plan you fund. Companies maintaining another employer-sponsored retirement plan in the same year are not eligible. You must generally include all employees age 21 and over if they received at least $5,000 in compensation during any two prior years and if you reasonably expect that they will receive at least $5,000 in the current year. 4

Employer contributions are tax-deductible. Earnings grow tax-deferred, and you pay no taxes on assets until you withdraw them in retirement.

The plan is funded with contributions deducted from employees' salaries, as well as annual employer contributions. Each eligible employee can decide whether or not to participate and how much to contribute, but employer contributions are mandatory.

Although, employers may decide to match only those employees who contribute or may provide a contribution to all eligible employees. Every year employers may switch between match OR contribute for all, if desired.

Employees can contribute up to 100% of compensation or a maximum of $16,000 for 2024 ($15,500 for 2023), for those age 50 and older $19,500 for 2024 ($19,000 for 2023).

What is different in 2024?

• Employers with 25 employees or fewer (who earned $5,000 or more in 2023) must allow an increased employee salary deferral limit of $17,600 (plus a $3,850 catch-up limit for those age 50 and older).
• While employers with 26 to 100 employees (who received at least $5,000 in compensation in 2023), may voluntarily allow the increased salary deferral limits above, the employer had to provide prior notice of the higher limits to all employees at least 60 days before the end of 2023. Larger employer contributions are also required if the higher limit was communicated in time.

New plans must be established by October 1 (if contributions will be made for that same year). Employer contributions must be made annually by the employer's tax-filing deadline, including extensions. Employee contributions are deducted from employees' salaries and must be deposited at least monthly.

• SIMPLE IRAs are easy to set up and maintain. IRS filing, tax reporting, and compliance testing are not required.
• Schwab reports all contributions and end-of-year fair market value on Form 5498 by May 31 each year.
• Full vesting is immediate

Withdrawals are penalty-free after age 59½. If you do not start Required Minimum Distributions (RMDs) by age 73, you may have to pay a penalty. The new SECURE 2.0 reduces the 50% penalty for missing an RMD effective for RMDs in 2023, it does not impact missed RMDs in 2022.  Under SECURE 2.0 if you don't take your RMD by the IRS deadline, a 25% excise tax on insufficient or late RMD withdrawals applies. If the RMD is corrected timely, the penalty can be reduced down to 10%. Follow the  IRS guidelines  and consult your tax advisor. Withdrawals before age 59½ are subject to a 10% penalty, and the penalty is increased to 25% if the withdrawal occurs within the first two years of participation in the SIMPLE IRA. There are certain exceptions for which you can withdraw funds before age 59½ without taking a 10% (or 25%) penalty, including:

• Rollover of distributions to another IRA or employer plan
• Higher education expenses for you or family members, including tuition, fees, books, supplies, and room and board (must be enrolled at least half-time)
• First-time home purchase expenses ($10,000 lifetime limit) to buy, build, or rebuild a first home for you or your parents, children, or grandchildren (Note: You must not have owned a home within the past two years.)
• Death or disability
• Birth or adoption expenses
• Certain medical expenses, including qualifying health insurance costs for certain unemployed individuals and nonreimbursed expenses exceeding 7.5% of adjusted gross income
• Withdrawals made in equal installments over the account holder's life expectancy

SIMPLE IRAs offer an easy way for business owners to contribute to a retirement plan while offering one to employees as well. These plans are low cost, easy to administer and maintain with no need to file with the IRS. You and your employees can contribute up to a maximum of 100% of compensation OR $16,000 for 2024 ($15,500 for 2023), whichever is less. If you or your employees are over age 50, salary deferral catch-up contributions increase the limit to $19,500 for 2024 ($19,000 for 2023), but still no more than 100% of compensation. With the matching option, you match the employee contribution dollar for dollar up to 3%, not to exceed the salary deferral limit for that year. In any two out of five consecutive years, you may match a smaller percentage, not less than 1%. You only contribute to the retirement accounts for the eligible employees who make salary deferral contributions. The nonelective contribution option requires that you contribute 2% of each eligible employee's compensation up to a maximum of $6900 for 2024 ($6600 for 2023). Employees do not have to make contributions themselves, to get the nonelective contribution.

To offer the SIMPLE IRA plan, as an employer, you must employ 100 people or fewer, each of whom earned at least $5,000 during the previous year. This includes all employees, regardless of whether or not they are eligible to participate in your SIMPLE IRA plan. Employees who earned $5,000 in ANY two (2) previous years working for the employer are eligible for the SIMPLE IRA. Employees who are not eligible, or who can be excluded from the eligible category, include those who belong to organized unions and any nonresident alien employees who received no U.S. wages, salaries or other personal services compensation from you. To make contributions for the current year, you must establish a new SIMPLE IRA plan between January 1 and October 1 of the tax year unless your business is established after October 1. You may not maintain any other retirement plans such as SEP IRAs, profit-sharing or 401(k) plans. (Unionized employees are an exception to this rule.) If the number of people you employ goes over 100, you can still maintain your SIMPLE IRA plan for two years after the first year the 100-employee limit is exceeded. After two years, if you still employ more than 100 people, you are no longer eligible to maintain a SIMPLE IRA plan.

Employers - Establish Your Plan

Employers: Follow these instructions to establish and contribute to a new Schwab SIMPLE IRA Plan*. Need help? Call  800-435-4000 .

• Review the basic plan document , which describes and governs your account, and keep it for your records.
• Print and complete the adoption agreement . Retain a copy and return the signed original to Schwab.
• Print and complete your employer's agreement . Retain a copy and return the signed original to Schwab.
• Read answers to frequently asked questions about the Schwab SIMPLE IRA.
• Optional: Review the benefits, features, and contribution eligibility of the plan.

Employer Next Steps

After you've done your initial paperwork, here are the next steps.

Employees can open their account electronically by clicking Open a SIMPLE IRA . Or refer your employees (Participants) to the "Participants - Enroll in Your Company's Plan" OR Download, print, and distribute the following documents to each eligible employee.

*Note: Before distributing the Participant Notice and Summary Description to your eligible employees, complete the document in accordance with the elections you made on the Adoption Agreement.

Once you have established your Schwab SIMPLE IRA plan, opened your own SIMPLE IRA, and opened SIMPLE IRAs for eligible employees (as applicable), you may begin making contributions. To fund your plan, print and complete the  Contribution Transmittal Form . Be sure your check total matches the total amount of participant contributions. Mail your check and the transmittal form to the nearest Schwab operations center listed below:

Charles Schwab & Co., Inc. P.O. Box 628291 Orlando, FL 32862-8291

Charles Schwab & Co., Inc. P.O. Box 982600 El Paso, TX 79998-2600

*Note: Schwab does not accept the 5305 or 5304 IRS Model Plan, or any other provider's Model Plan.

Participants - Enroll in Your Employer Plan

If your Employer has already established a Schwab SIMPLE IRA retirement savings plan to help you meet your retirement goals, and they have had advised you that you are eligible to participate, follow these instructions to open your SIMPLE IRA Account.

Your Employer should have already provided you with the Schwab SIMPLE IRA Enrollment Kit. Review the enclosed Employee Q& A and the Participation Notice & Summary Description included in that kit to learn all about the Schwab SIMPLE IRA.

• Click on Open a Simple IRA Account below to immediately open your account online.
• Download, print and save the following documents below.

If you prefer to open your new account by paper application, download the documents below, complete and return them to your Employer.

*Note: Schwab does not accept the 5305 or 5304 IRS Model Plan, or any other provider's SIMPLE Adoption Agreement/Prototype Plan.

Paper Enrollment Instructions

• Download and Read the Employee Instructions and follow the instructions if you plan to print, complete your application by paper.
• Download and Complete the Elective Deferral Agreement . Be sure to indicate whether you want your salary deferred as a percentage or fixed amount. Return this document to your employer.
• If choosing to complete your Schwab IRA Account Application by paper, complete the application and return it to your employer along with your completed Elective Deferral Agreement. Otherwise, click on "Open a SIMPLE IRA Account" to begin your enrollment and open your Account online.

NOTE: For questions or help completing the SIMPLE IRA forms, see your employer or Plan Administrator.

Take the Next Step

Employers-establish your simple ira plan today..

Get detailed instructions above in the "Employers - Establish Your Plan" section

Call  800-435-4000 .

Participants/Employees – Open a SIMPLE IRA Account

If your Employer has already established a Schwab SIMPLE Plan, you can apply for your SIMPLE IRA Account. You will be required to provide your Employer’s SIMPLE IRA Group ID during the Account Open process. Get detailed instructions above in the "Participants - Enroll in Your Employer Plan" section.

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What Is a SIMPLE 401(k) Plan?

• How It Works
• Rules and Regulations
• Advantages and Disadvantages

The Bottom Line

• Retirement Planning

SIMPLE 401(k) Plan: What It Is, How It Works, FAQ

Small business owners should know about this retirement-plan option

A SIMPLE 401(k) is a retirement savings account offered by small business employers with 100 or fewer employees. The SIMPLE 401(k) works just like a regular 401(k) plan , combining it with the simplicity of a SIMPLE IRA with a few minor changes. Employees can defer some of their wages to the plan and employers must either make a matching or non-elective contribution of a certain amount of each employee's wages.

Employers who are eligible to set up these plans must meet certain eligibility requirements and the Internal Revenue Service (IRS) sets limits on how much can be contributed each year.

Key Takeaways

• SIMPLE 401(k) plans are retirement savings plans offered by small business employers or companies with 100 or fewer employees.
• This kind of plan combines the features of traditional 401(k)s with the simplicity of SIMPLE IRAs.
• Participants must be at least 21 and have one year of service before they can participate.
• Contributions to the plan are fully vested immediately and employees are allowed to borrow against their account balances.
• Employees who provide SIMPLE 401(k)s can't offer their employees any other options and contribution limits are lower than traditional 401(k) plans.

How SIMPLE 401(k) Plans Works

As the name implies, the SIMPLE 401(k) is a simplified, stripped-down version of a regular 401(k) plan that is geared toward self-employed individuals and small business owners. And just like SIMPLE IRA accounts, only employers with a staff of 100 or fewer can establish SIMPLE 401(k) plans. Establishing businesses can be structured in any form, including sole proprietors, corporations, and partnerships.

SIMPLE 401(k)s work just like regular 401(k)s. Employees contribute with pre-tax dollars out of their paychecks, investing the funds in options provided by the plan administrator . The IRS limits annual contribution amounts, which are about two-thirds of those allowed for regular 401(k)s. Employees can contribute a maximum of $15,500 in 2023 and $16,000 in 2024. People 50 and over are allowed to deposit an additional catch-up contribution of $3,500 in 2023 and 2024.

All employer contributions to a SIMPLE 401(k) are subject to an employee compensation cap, which is $330,000 for 2023 and $345,000 for 2024. This is one way the  SIMPLE 401(k) differs from a SIMPLE IRA . Unlike traditional 401(k)s, employers are required to make either a matching contribution to their employees' accounts—up to 3% of each employee's pay or a  nonelective contribution of 2% of each eligible employee's pay.

Companies that offer their employees a SIMPLE 401(k) plan must file Form 5500 every year.

SIMPLE 401(k) Rules and Regulations

Employees who are at least 21 years old and completed at least one year of service must be allowed to participate in their employers' SIMPLE 401(k) plans. They must also receive at least $5,000 in SIMPLE compensation from their employers for the preceding year in order to take part.

Funds in a SIMPLE 401(k) must be held in the account until the employee reaches age 59½. Withdrawals made before that point are subject to an early withdrawal penalty of 10%.

The employer must provide a deferral notice to each eligible employee for the year the plan is established and for each year the employer continues to maintain the plan. This notification must be provided at least 60 days before the employee becomes eligible to participate. It must include a statement of the employee's right to make salary deferral contributions and to terminate their participation in the plan.

The "SIMPLE" in a SIMPLE 401(k) plan is short for Savings Incentive Match Plan for Employees of Small Employers.

Advantages and Disadvantages of SIMPLE 401(k)s

There are a number of different benefits to participating in a SIMPLE 401(k) plan. But there are also several drawbacks. We've noted some of the major ones below.

Contributions to a SIMPLE 401(k) are immediately 100% vested . An employee who meets the requirements to receive distributions from the plan may withdraw their entire account balance whenever they like and won't lose it if they switch jobs after the money is in their account.

One of the simplified features is that SIMPLE 401(k) plans do not require nondiscrimination and top-heavy testing to ensure that the plan operates in compliance with IRS rules. Such testing must generally be done by professionals and can be quite costly.

Although withdrawals before the age of 59½ are subject to a penalty, employees can take out loans against their SIMPLE 401(k) balances. They also have the option of making hardship withdrawals from their plans if they need to do so.

Disadvantages

Unlike other retirement options, employer contributions are mandatory for those who offer SIMPLE 401(k) plans to their employees. As noted above, employers have one of two options available. They can contribute either 3% of each employee's pay or they can make nonelective contributions of 2% of each eligible worker's salary.

IRS rules prohibit a company from offering other types of retirement plans to employees already covered by a SIMPLE 401(k). That said, these companies may choose to maintain a separate retirement plan for other employees not covered by the SIMPLE 401(k).

Contribution caps to SIMPLE 401(k)s are smaller than those for traditional 401(k) plans. As noted earlier, employees can only contribute $15,500 in 2023 to a SIMPLE 401(k) plan with catch-up contributions of $3,500 per year for those 50 and older. Though these amounts increased to $16,000 of contributions with the same catch-up of $3,500 in 2024, these amounts are still lower than other retirement plans. For example, taxpayers can set aside $22,500 to their 401(k)s in 2023 and $23,000 in 2024. Catch-up contributions for these plans are $7,500 in both 2023 and 2024.

Immediate 100% vesting for employees

No discrimination testing for employer

Loans and hardship withdrawals allowed

Mandatory contributions (for employer)

No other plans allowed

Smaller employee contributions than regular 401(k)

Lower employee contribution limits

Who Is Eligible for a SIMPLE 401(k)?

A SIMPLE 401(k) is available for small businesses that have 100 or fewer employees who earn more than $5,000 per year.

What Is the Difference Between a SIMPLE 401(k) and a SIMPLE IRA?

Both SIMPLE IRA and SIMPLE 401(k) plans are options for small business owners to provide retirement benefits to themselves and their employees. The key differences are that SIMPLE 401(k)s allow for loans while SIMPLE IRAs do not, and a SIMPLE 401(k) requires employees to be 21 years or older while SIMPLE IRAs have no age restrictions.

How Much Can You Contribute to a SIMPLE 401(k)?

A SIMPLE 401(k) limits employees to $15,500 in contributions for 2023 and $16,000 in 2024. This is in contrast to a traditional 401(k), which has a $22,500 limit in 2023 and a $23,000 limit in 2024. Individuals may also qualify to make catch-up contributions for both plans.

Can I Have a SIMPLE 401k and a Traditional IRA?

Yes, you can maintain and contribute to an individual retirement account (IRA) while also having and contributing to an employer-sponsored SIMPLE 401(k) plan.

Helping your employees save for retirement is a great way to keep turnover rates down and retention up. It doesn't hurt in attracting talent, either—keeping a small firm competitive with the perks offered by larger corporations.

While SIMPLE 401(k) plans have a lot of benefits, such as easy-to-manage rules, they do have some disadvantages when compared with other savings plans. The mandatory contributions and the paperwork, simplified though it is, can be a burden.

As a result, they're not for every company but then, few options are. Consult with 401(k) plan providers and your team of tax professionals to see if this retirement vehicle is the best suited for you and your staff .

Internal Revenue Service. " Choosing a Retirement Plan: SIMPLE 401(k) Plan ."

Internal Revenue Service. " 401(k) Limit Increases to $23,000 for 2024, IRA Limit Rises to $7,000 ."

Internal Revenue Service. " 2024 Limitations Adjusted as Provided in Section 415(d), etc.; Notice 2023-75 ." Page 1.

Internal Revenue Service. " 401(k) Plans for Small Businesses ." Page 4.

Internal Revenue Service. " 401(k) Plan Overview ."

Internal Revenue Service. " Publication 560, Retirement Plans for Small Business ." Pages 14, 17.

Internal Revenue Service. " SIMPLE IRA Plan ."

Internal Revenue Service. " Choosing a Retirement Solution for Your Small Business ." Page 4.

• Best Strategies to Maximize Your 401(k) 1 of 20
• What Rate of Return Should I Expect on My 401(k)? 2 of 20
• 401(k) Fees: Everything You Need to Know 3 of 20
• Best Ways to Use Your 401(k) Without a Penalty 4 of 20
• Income Limits for 401(k)s: Highly Compensated Employees 5 of 20
• What to Do After You Have Over-Contributed to Your 401(k) 6 of 20
• Divorce and 401(k): What You Need to Know 7 of 20
• The Average 401(k) Balance by Age 8 of 20
• What to Do After Maxing Out Your 401(k) Plan 9 of 20
• How Do 401(k) Catch-Up Contributions Work? 10 of 20
• 401(k) Withdrawal Rules: What You Need To Know 11 of 20
• How Is Your 401(k) Taxed in Retirement? 12 of 20
• Can Your 401(k) Impact Your Social Security Benefits? 13 of 20
• Managing Your Own 401(k): The Pros and Cons 14 of 20
• What Is a Solo 401(k) or Self-Employed 401(k)? Contribution Limit 15 of 20
• SIMPLE 401(k) Plan: What It Is, How It Works, FAQ 16 of 20
• Small Business 401(k)s: How to Leverage the Multiple Employer DOL Rule 17 of 20
• Can I Fund a Roth IRA and Contribute to My Employer’s Retirement Plan? 18 of 20
• Must-Know Rules for Converting Your 401(k) to a Roth IRA 19 of 20
• What Are the Risks of Rolling My 401(k) Into an Annuity? 20 of 20

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Compare our small-business retirement plans

Vanguard sep-ira (one person).

Plan sponsors and participants

Individuals who are self-employed or earn freelance income, and don't employ others, who want to establish a retirement account for themselves.  

Contributions

For 2024, up to 25% of the employee's compensation or $69,000, whichever is less.

Self-employed individuals must calculate their maximum contribution using the rate table or worksheets in Chapter 5 of  IRS Publication 560   Retirement Plans for Small Business , or see a tax advisor.

Investment options

Any publicly traded asset including Vanguard mutual funds and ETFs, as well as additional brokerage options.

No plan setup fee.

For more information  see Vanguard annual account service fees

Filing requirements

Doesn't require IRS filing.

Small-business retirement plan pages

Learn more about the Vanguard SEP-IRA

Ascensus Individual(k)

Self-employed individuals or businesses with no common-law employees that want to maximize tax deferrals, including those interested in a Roth option.  

For 2024, up to $23,000, not to exceed 100% of compensation.

Roth contributions are accepted.

For 2024, up to 25% of the employee’s compensation, not to exceed annual maximums.    Maximum amount of employer plus employee contributions for 2024:

$69,000    Catch-up contributions for 2024:

An employee over age 50 can contribute an additional $7,500

Investment choices

You'll have access to a diverse lineup of Vanguard mutual funds.

Requires IRS filing.

Ascensus SIMPLE IRA

Self-employed individuals or businesses that have 100 or fewer employees and want to encourage employee contributions and provide an annual employer contribution.

For 2024, up to $16,000, not to exceed 100% of compensation.

Match up to 3% of employee's compensation

An annual nonelective contribution of 2% of each eligible employee's compensation.

Catch-up contributions for 2024:

Employees over age 50 can contribute an additional $3,500.

SECURE 2.0 permits eligible employers to provide additional contribution options. Please see a qualified tax advisor for more information.

Ascensus SEP IRA (Multiple participants)

Small businesses that want to provide a retirement benefit to all employees (including the business owners) solely through employer contributions.  

For 2024, up to 25% of the employee's compensation or $69,000, whichever is less. 1

Vanguard is only responsible for content on our own website.

1 Self-employed individuals must calculate their maximum contribution using the rate table or worksheets in Chapter 5 of  IRS Publication 560   Retirement Plans for Small Business , or see a tax advisor.

All investing is subject to risk, including the possible loss of the money you invest.

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What Is a SIMPLE IRA Plan? How It Works, Rules & FAQs

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A SIMPLE IRA plan (Savings Incentive Match Plan for Employees) can be a way for small-business employees and self-employed people to save for retirement. Although more similar to a traditional IRA than a 401(k) plan offered by larger employers, this workplace retirement savings account allows both employee and employer contributions.

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What is a SIMPLE IRA?

A SIMPLE IRA is a type of tax-deferred retirement plan for small businesses with fewer than 100 employees. While it is considered an employer-sponsored retirement plan — and employer contributions are mandatory — its investment, distribution and rollover rules make it more similar to a traditional IRA .

Employees might like that employer match, but they may be less happy about the lower contribution limits, compared with 401(k)s . They may also lament the lack of a Roth version.

Additionally, if you work for yourself, you’re also allowed to contribute to a SIMPLE IRA, although there may be better retirement plan options for self-employed people .

SIMPLE IRA vs. traditional IRA

SIMPLE IRAs bear some similarities to traditional IRAs. Contributions are tax-deferred, meaning the amount you save up to your contribution limit reduces your taxable income for the year, and investment growth is tax-deferred until you start taking distributions after age 59 ½.

SIMPLE IRA vs. 401(k)

In some ways, SIMPLE IRAs are like 401(k) plans: Eligible employees indicate how much (if anything) of each paycheck they want to contribute to the account, and the money is automatically diverted into the worker’s individual investment account. The big difference is how much employees can contribute.

SIMPLE IRA contribution limits for 2024

The employee contribution limit for a SIMPLE IRA in 2024 is $16,000. People age 50 and older can make an additional $3,500 catch-up contribution.

Employer contributions are mandatory and can be made using one of two methods:

Provide matching contributions up to 3% of the employee’s pay, not limited by any annual compensation limit.

Make nonelective contributions equal to 2% of the employee’s compensation based on a maximum salary of $345,000 in 2024.

Starting in 2024, employers can make additional contributions to each employee, as long as the contribution does not exceed the lesser of up to 10% of compensation or $5,000 [0] Senate.gov . SECURE 2.0 Act of 2022 . Accessed Nov 6, 2023. View all sources .

Employer contributions need to be made by the income tax deadline, or by the extension deadline if applicable.

» Thinking about the future? Learn about succession planning for your business .

Benefits of a SIMPLE IRA

Benefits for employers.

For employers, SIMPLE IRAs have start-up and operating costs that are generally lower than setting up a 401(k) plan. Employers get a tax deduction for their contributions to employees’ accounts.

Benefits for employees

Employees don’t have to sign up for salary deferrals to get the employer contribution if their employer chooses the nonelective 2% contribution option. If the plan uses the elective salary reduction/matching method, the employee must contribute to earn the match.

Eligibility requirements are low. In general, you’re eligible to participate in a SIMPLE IRA if you’ve received at least $5,000 in compensation during any two preceding calendar years and expect to earn at least that much during the calendar year of participation. But the IRS also allows employers to offer these accounts to employees who don’t meet these standards.

Employer contributions vest immediately. With no vesting period, you have 100% ownership of all the money in your SIMPLE IRA.

The IRS lets individuals contribute to other retirement savings plans at the same time. That’s handy if, for example, you have more than one job that offers an employer-sponsored retirement plan or if you also want to contribute to a traditional or Roth IRA .

Investment choices tend to outnumber what’s offered in 401(k)s. Instead of being limited to whatever mutual funds a 401(k) plan administrator chooses, you can invest in stocks, bonds, mutual funds and any other investments offered by the IRA provider.

Drawbacks of SIMPLE IRA plans

The contribution limits for SIMPLE IRA plans are lower than other workplace retirement plans. In 2024, solo business owners can contribute up to $16,000 versus $23,000 in a 401(k) plan. Those age 50 and older can include catch-up contributions to both a SIMPLE IRA and 401(k) plan, it's also still less — $19,500 total into a SIMPLE IRA versus $30,500 into a 401(k).

There is no Roth version of the SIMPLE IRA. This is a big drawback given the benefits of Roth IRAs and Roth 401(k)s. (See “ What Is a Roth IRA? ” for more on why we like these accounts.)

Other downsides include:

Participant loans are not allowed.

You’ll pay a steep tax penalty for some early withdrawals. In general, SIMPLE IRA distribution rules mirror traditional IRA withdrawal rules , except for nonqualified withdrawals within the first two years of your participation. For those, you’ll pay an extra early withdrawal penalty on top of the standard 10% penalty. That means if you tap into the money before age 59 ½ and before you’ve had the plan for two years, you’ll likely owe the IRS 25% of the money you take out, plus whatever income taxes you owe on the distributed money.

Rollovers to another IRA or employer-sponsored retirement plan are subject to strict rules. The 25% penalty mentioned above also applies if you do a rollover into anything other than another SIMPLE IRA during the two-year period after you first participate in the plan.

» Looking to open an IRA? Here are our top picks for the best IRA accounts

Is a SIMPLE IRA right for me?

The answer depends on whether you're an employee or the employer.

For business owners: If you're a solo business owner or self-employed and your goal is to maximize your own retirement savings, there are other retirement savings plans that have higher contribution limits:

A solo 401(k) allows a business owner with no employees to contribute up to $69,000 in 2024, with an additional $7,500 catch-up contribution if you’re age 50 or older. The exception to the no-employees rule is if your spouse earns income from your business.

A SEP IRA (Simplified Employee Pension Individual Retirement Account) is a lot like a SIMPLE IRA. But like a solo 401(k), the contribution limits are much higher: You’re allowed to contribute either 25% of compensation or up to $69,000 in 2024.

If you own a small business with employees, a SIMPLE IRA might be attractive if you want to offer your employees a retirement plan but would like to avoid the extra administrative costs that can come with a 401(k). Just keep in mind that some employees may still want a 401(k) because of its higher contribution limits.

The Secure 2.0 Act made make it easier to replace SIMPLE IRA offerings with 401(k)s: Employers can make the switch mid-year, rather than at year-end, so long as the new 401(k) plan is in place by the time the SIMPLE IRA is terminated [0] senate.gov . SECURE 2.0 Act of 2022 . View all sources .

For employees: Anyone who has access to the plan at work and wants to maximize their savings may want to consider participating in the SIMPLE IRA plan to get the free money.

If your plan provides the automatic 2% employer contribution, you’ll get that money even if you elect not to divert any of your salary. If the employer contribution is offered by matching funds, you must sign up to contribute a portion of your salary to earn the match. (Remember: You can still save in other types of retirement savings accounts in addition to a SIMPLE IRA.)

» Read more about how to choose between a SIMPLE IRA and a 401(k)

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Attract talented employees while saving for your own retirement

A savings incentive match plan for employees (simple) ira is a plan for businesses with 100 or fewer employees. you make contributions for your employees, who can also contribute through salary deferrals., simple ira features, bring value to your business without the extra fees.

Which retirement account is right for your business?

What's a key difference between a simple ira and a sep ira, get started with a simple ira in 3 easy steps, decide how you want to invest, open your account, explore all plans available for small business, ready to get started, frequently asked questions, who contributes to a simple ira, how much are employers required to contribute, what are the employee contribution limits footnote  3, who is eligible to participate in a simple ira, what investment choices are available, how much does it cost to set up and administer a simple ira, does the plan take a lot of time to administer, what if i prefer to invest with an advisor, what are the advantages for employees, when are contributions fully vested, can participants take a loan or withdraw funds from their simple ira before they reach age 59½, what if my business grows beyond 100 employees, is irs reporting required.

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Simply Retirement by Principal ® is a collaboration between two companies that have helped thousands of small businesses navigate retirement plans successfully. It’s backed by more than 75 years of retirement expertise from Principal * , along with the 20-year track record of Ubiquity Retirement + Savings ® . Once your clients purchase a plan, they’ll manage it on the same convenient digital platform used by more than 10,000 Ubiquity small business customers * .

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How can my clients benefit from SECURE 2.0 Act tax credits?

The SECURE 2.0 Act offers a tax credit that can help offset up to 100% (up to $5,000 per tax year for the first three years for some employers) for a new 401(k) plan. There’s also a tax credit for automatic enrollment, which is a feature of the Simply Retirement by Principal ® plan.

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Simply Retirement by Principal ® is 100% online, from plan design and purchase to onboarding and administration. It’s also designed specifically for businesses with fewer than 100 employees.

*Recordkeeping-fee: Pricing shown applies when working with a TPA. Bundled pricing is a $500 initial setup fee, then $185 per month. Fees paid by the business owner are billed quarterly. Fees paid by participants are deducted monthly from participant accounts. Participant fees are charged if there is a $100 account balance, regardless of whether the participant is active or inactive. Custodial and investment fees are charged against participating employees’ accounts (those vary by investment and range from 0.03% - 0.95%, as of March 31, 2024, 2022). If the business owner chooses to work with a financial professional and/or TPA, their fees are also additional and may be billed to the business owner. Financial professional fees may be deducted from participant accounts.

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Best Retirement Plans for Solo Entrepreneurs: 2024 Guide to Maximizing Savings with No Employees Small Business Tax Savings Podcast

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Send us a Text Message. Are you a solo entrepreneur puzzled by the myriad of retirement planning options? Mike Jesowshek welcomes back Matt Ruttenberg to discuss retirement plan options for solo entrepreneurs without employees. They highlight various plans like IRAs, SIMPLE IRAs, SEP IRAs, and solo 401(k)s, emphasizing the importance of starting with the desired savings amount to determine the most suitable plan. The episode covers the contribution limits, the benefits of each plan type, and the financial implications of choosing one plan over another, particularly in terms of tax deductions and maximizing retirement savings. Discover how choosing the right plan can maximize your savings and secure your financial future by tuning in! [00:00 - 05:48] Exploring Basic Retirement Plan Options, SEP IRAs, and Solo 401(k)s Mike introduces the topic of retirement plans for solo entrepreneurs.Matt discusses simple retirement options like individual IRAs and SIMPLE IRAs, highlighting their benefits and contribution limits.He elaborates on the higher contribution limits of SEP IRAs and the advantages of solo 401(k)s, including their structure and potential for higher savings. [05:48 - 15:22] Comparison of SEP IRA and Solo 401(k) Contributions and Decision-Making in Retirement Planning Matt and Mike share a detailed explanation of how contribution limits are calculated based on business type and income.They discuss the extra benefits of solo 401(k)s, such as catch-up contributions for those over 50.Choosing the right retirement plan based on the amount one wants to save simplifies the decision-making process. [15:22 - 20:05] Closing and Resource Mention Direct Quote: "So you might have a couple hundred dollars of fees, but you are netting a substantial amount more, going into that solo than you are with the SEP IRA." - Matt Ruttenberg Connect with Matt Ruttenberg! LinkedIn: https://www.linkedin.com/in/mattruttenberg/  ______ Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast Join TaxElm: https://taxelm.com/ IncSight Packages (Full-Service): https://incsight.net/pricing/ Book an Initial Consultation (IncSight): https://app.simplymeet.me/o/incsight/sale ------- Podcast Website: https://www.TaxSavingsPodcast.com Facebook Group: https://www.facebook.com/groups/taxsavings/ YouTube: https://www.youtube.com/@TaxSavings 

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Three Details That Matter for a Successful Retirement

Many people skip over retirement planning specifics that could help them create a stronger plan that would better match their needs. Here’s how to not do that.

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Fictional crime fighter Jack Reacher doesn’t offer retirement advice (at least not to my knowledge), but one of his quotes does resonate with me: “In an investigation, details matter.”

The same can be said for retirement planning .

Unfortunately, too many people planning for retirement sidestep the details that could help them create a stronger plan that would better match their needs. Instead, they skip straight to the solutions, choosing investment options without taking the time to determine what is actually needed or taking into consideration all the individual circumstances that can come into play when deciding the best way to proceed.

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Maybe with this process, they will hit the mark. But just as likely — or more likely — they will miss it completely.

Imagine if a surgeon worked this way. Instead of studying your symptoms, checking your vital signs and running tests before deciding whether to operate, the surgeon just said, “Let’s go straight to cutting you open and see what we find.”

Personally, I would prefer a more detail-oriented surgeon.

For your retirement, you should be detail-oriented, as well.

Taking the right amount of risk

That means starting by looking at where you are today. What income and expenses do you have? What retirement savings have you already accumulated? How far out are you from retirement (five years? 10 years?), and what will your needs be when you get there?

There is also the matter of risk . How much risk do you want to take with your investments? How much risk can you really afford? And are you truly aware of how much risk you have in your portfolio right now?

When I work with clients, one of the first things I do is establish a risk score for them, which helps the client — and me — better understand where they fall in terms of risk tolerance and how that meshes with their current investments. People are often surprised to learn they are taking more risk than they realized.

Sometimes this is because they didn’t understand just how risky a particular investment was. But sometimes it is because they made investment decisions long ago and then didn’t revisit those decisions as time passed. That is somewhat common with 401(k) plans. People open their 401(k) account when they join a new employer, choose from a set list of investment options that the plan offers and then just let those choices ride.

If that scenario describes you, it might be worth taking a look at the details of the 401(k) option you chose years ago to see if it is still what you want and makes sense for your current retirement plans. Maybe it’s fine, especially if you chose a target-date fund that was tied to your age. But it’s important to know for certain in case an adjustment is warranted.

Delving into the details of your finances, your lifestyle and your expectations for retirement can also reveal inefficiencies. Not long ago, I had a client who, because of the way his finances were structured, was paying more than he needed to in taxes.

The discovery of that detail ended up reducing his tax bill and saving him money.

The big impact of small adjustments

Another detail people sometimes overlook is the way relatively minuscule changes can lead to big results.

We often look at financially successful people and erroneously conclude that their accomplishments (and wealth) happened quickly and dramatically, like the retirement planning version of a lottery winner.

It usually doesn’t occur that way.

Instead, the person probably built their wealth bit by bit by making decisions that didn’t provide enormous earnings in the short term but paid off over time. You can do the same with your retirement planning.

One of the best examples of this is contributions to your 401(k) plan. Many employers match your contributions up to a certain percentage point. I often find, though, that people fail to make sure they are contributing enough to receive the full company match.

The employer might match an employee contribution up to 5%, for example, but the person is contributing only 4% of their weekly pay. That extra 1% of free money seems insignificant — and more or less is if you think only in terms of one week or one month. But when you start talking about every paycheck over years or even decades, those dollars add up, especially when you also factor in any investment gains over that time.

Suddenly, that extra $20 or $30 a week (or whatever it might be) no longer seems so negligible.

A lack of estate planning

Another surprising financial planning detail people often overlook ( even wealthy and famous people ) is the importance of estate planning . They never take the time to create a will, a trust or anything that helps make sure their wishes are known for how their estate will be passed on to their heirs.

Howard Hughes, Pablo Picasso and Prince are a few examples of celebrities who died without a will , leaving others to puzzle out and argue over their wishes. In Prince’s case, it took six years of legal battles before his $300 million estate could be settled.

This is not something you want to leave to chance, the courts or feuding relatives. If you work on the details of your estate, not only can you ensure your money will go to the people or charities that you prefer, but you may also be able to improve the tax implications for your heirs.

Sadly, with retirement planning, it’s easy to overlook the details. That’s why it’s important to meet with a financial professional who also cares about the details and has the skill and knowledge to help you with them.

Because the details really do matter.

Just ask Jack Reacher.

Ronnie Blair contributed to this article.

The appearances in Kiplinger were obtained through a PR program. The columnist received assistance from a public relations firm in preparing this piece for submission to Kiplinger.com. Kiplinger was not compensated in any way.

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Mark Gelbman is the owner and adviser at Strategic Wealth Solutions in Urbandale, Iowa, who has more than 20 years of experience helping clients achieve their financial planning goals. His certifications include the CFP®, CLU®, CRPC® and AAMS® designations. Gelbman believes that the key to achieving financial planning success is taking that first step and implementing incremental change rather than radical change.

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By Carol A. Bogosian, ASA Published 7 May 24

A previous article struck a chord with readers internationally — and lawyers — and the advice we shared has worked well.

By H. Dennis Beaver, Esq. Published 7 May 24

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6 easy steps to become a sep-ira millionaire.

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Can a SEP IRA make you a millionaire?

Anyone, and I mean anyone, can become an IRA millionaire if given enough time. According to Fidelity, the number of IRA millionaires on its platform has grown 40% over the past year. That figure doesn't include all retirement account millionaires (those combining assets in retirement accounts).

Becoming a SEP-IRA millionaire may be easier than becoming a 401(k) millionaire. However, you will need to have self-employment income to contribute. Keep reading as we share the reasonably easy steps to put yourself on the path to becoming a SEP-IRA millionaire.

1) Be Self-Employed And Pay Yourself

To become a SEP-IRA millionaire, you need to be eligible to contribute to one. For most people, this means owning a business, being self-employed, or being an independent contractor with income paid via 1099.

2) Open A SEP-IRA Account

For many, the biggest hurdle to becoming a SEP-IRA millionaire is simply getting started. This is a relatively easy process that involves a bit of paperwork. It gets even easier if you have a tax-planning-focused financial planner who takes care of opening the account for you.

If you are self-employed, take the time to set up a SEP-IRA or Solo 401(k) for your business. If you make more than $500,000 per year, consider also setting up a c ash balance pension plan for even more tax savings.

Samsung Issues Critical Update For Millions Of Galaxy Users

How to watch real martha baby reindeer interview with piers morgan, drake kendrick lamar feud timeline attempted intruder arrested at drake s toronto home police say, 3) contribute enough money to your sep-ira.

The third step toward becoming a SEP-IRA millionaire is determining how much money to contribute. Below, we will share some math for building a millionaire retirement account. A rough rule of thumb is to save at least 10% of your salary. If you start late or want to become a SEP-IRA millionaire more quickly, you must contribute even more.

The tax benefits of contributing to a SEP-IRA can help you make even larger contributions each year. You will not owe income taxes on the amount you contribute to your SEP-IRA each year. The maximum SEP-IRA contribution for tax year 2023 is $66,000. The SEP-IRA contribution limit for 2024 is $69,000. Remember that your maximum SEP contribution each year will depend on your business income.

The magic of compound interest can help you use your SEP IRA to become a millionaire.

4) Invest Your SEP-IRA Contributions

Becoming a SEP-IRA millionaire without contributing $1 million into your retirement account will require investing your funds. Compounding interest can help your money grow even faster.

If you want to do it the slow and hard way by contributing $22,500 per year to your SEP-IRA and just having it sit there, it will take around 45 years. Assuming a 10% return on your investments, it would take 18 years with the same $22,500 yearly contribution.

If you were able to make the current maximum $69,000 contribution to your SEP each year, it would take just under 10 years to become a SEP-IRA millionaire.

5) Take The Time To Become A SEP-IRA Millionaire

Becoming a SEP-IRA millionaire takes time. There are annual contribution limits to your retirement accounts, so at a minimum, we are talking about a few years for anyone to become a SEP-IRA millionaire. Here are some rough calculations to become a SEP-IRA millionaire, depending on how long you have to reach this big milestone. We are assuming an eight-percent return on your retirement account investment.

Forty-eight years requires about $170 per month.

Thirty years requires about $735 per month.

Twenty years requires about $1,821 per month.

Ten years would require about $5,755 per month.

Five years require about $14,205 per month (which is above the contribution limits.)

As you can see, the earlier you start investing for retirement, the easier it will be to become a SEP-IRA millionaire.

Avoid raiding your SEP IRA when times get tough.

6) Don't Make The Mistake Of Raiding Your SEP-IRA

Following these five steps should have you well on your way to becoming a SEP-IRA millionaire. However, if you make the mistake of raiding your investments before retirement, you will significantly reduce your chance of achieving financial freedom. You will also get hit with taxes and penalties on withdrawals. Not raiding your SEP-IRA when times get tough is essential to accumulating enough assets to maintain your standard of living in retirement.

Follow these simple steps, and you should be on your way to becoming a real-life retirement account millionaire. While a million-dollar balance in your SEP-IRA is a huge accomplishment, most people reading this post will likely need to accumulate even more retirement assets to have the retirement they dream of. Work with your fiduciary financial planner to determine your financial freedom number .

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Money latest: Chocolate is a superfood - if you buy these bars

Read all today's personal finance and consumer news below - and leave a comment on any of the stories we're covering.

Friday 10 May 2024 22:26, UK

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If you've missed any of the features we've been running in Money this year, or want to check back on something you've previously seen in the blog, this archive of our most popular articles may help...

Loaves of bread have been recalled from shelves in Japan after they were found to contain the remains of a rat.

Production of the bread in Tokyo has been halted after parts of a "small animal" were found by at least two people.

Pasco Shikishima Corp, which produces the bread, said 104,000 packages have been recalled as it apologised and promised compensation.

A company representative told Sky News's US partner network, NBC News, that a "small black rat" was found in the bread. No customers were reported to have fallen ill as a result of ingesting the contaminated bread.

"We deeply apologise for the serious inconvenience and trouble this has caused to our customers, suppliers, and other concerned parties," the spokesman said.

Pasco added in a separate statement that "we will do our utmost to strengthen our quality controls so that this will never happen again. We ask for your understanding and your co-operation."

Japanese media reports said at least two people who bought the bread in the Gunma prefecture, north-west of Tokyo, complained to the company about finding a rodent in the bread.

Record levels of shoplifting appear to be declining as fewer shopkeepers reported thefts last year, new figures show. 

A survey by the Office for National Statistics shows 26% of retailers experienced customer theft in 2023, down from a record high of 28% in 2022.

This comes despite a number of reports suggesting shoplifting is becoming more frequent. 

A  separate ONS finding , which used police crime data, showed reports of shoplifting were at their highest level in 20 years in 2023, with law enforcements logging 430,000 instances of the crime.

Let's get you up to speed on the biggest business news of the past 24 hours. 

A privately owned used-car platform is circling Cazoo Group, its stricken US-listed rival, which is on the brink of administration.

Sky News has learnt that Motors.co.uk is a leading contender to acquire Cazoo's marketplace operation, which would include its brand and intellectual property assets.

The process to auction the used-car platform's constituent parts comes after it spent tens of millions of pounds on sponsorship deals in football, snooker and darts in a rapid attempt to gain market share.

The owner of British Airways has reported a sharp rise in profits amid soaring demand for trips and a fall in the cost of fuel.

International Airlines Group said its operating profit for the first three months of the year was €68m (£58.5m) - above expectations and up from €9m (£7.7m) during the same period in 2023.

The company, which also owns Aer Lingus, Iberia and Vueling, said earnings had soared thanks to strong demand, particularly over the Easter holidays.

The prospect of a strike across Tata Steel's UK operations has gained further traction after a key union secured support for industrial action.

Community, which has more than 3,000 members, said 85% voted in favour of fighting the India-owned company's plans for up to 2,800 job losses, the majority of them at the country's biggest steelworks in Port Talbot, South Wales.

Tata confirmed last month it was to press ahead with the closure of the blast furnaces at the plant, replacing them with electric arc furnaces to reduce emissions and costs.

In doing so, the company rejected an alternative plan put forward by the Community, GMB and Unite unions that, they said, would raise productivity and protect jobs across the supply chain.

Rishi Sunak has told Sky News that the UK exiting recession shows the economy has "turned a corner". 

He told our economics editor Ed Conway : "I am pleased that while there's more work to do, today's figures show that the economy now has real momentum, and I'm confident that with time, people will start to feel the benefits of that.

"We've had multiple months now where wages are rising, energy bills have fallen, mortgage rates are down and taxes are being cut... I'm pleased with the progress that we're making."

Mr Sunak added: "I am confident the economy is getting healthier every week."

Lidl will increase staff wages for the third time in 12 months, the supermarket has announced. 

Shop workers in London will get £13.65, up from £13.55, while staff elsewhere will get a rise from a minimum £12 to £12.40 - at a cost of £2.5m to Lidl.

The supermarket invested £37m in pay increases in March, on top of £8m in September - a total of more than £50m in the past 12 months. 

The increase comes into effect from 1 June. 

Lidl GB chief executive Ryan McDonnell said: "As we continue to expand, we are welcoming more customers and attracting more colleagues into the business every day.

"It's absolutely right, therefore, that we continue to offer industry-leading pay."

Tech giant Apple has apologised after an advert for its new iPad model prompted outrage.  

The ad promoting the thinnest-ever iPad shows creative tools including cameras, books, paint cans and musical instruments being crushed in an industrial press.

But many, including celebrities like Hugh Grant, decried the crushing of artistic objects.

In a statement released to Ad Age, Tor Myhren, Apple's vice president of marketing communications, said: "Creativity is in our DNA at Apple, and it's incredibly important to us to design products that empower creatives all over the world.

"Our goal is to always celebrate the myriad of ways users express themselves and bring their ideas to life through iPad. We missed the mark with this video, and we're sorry."

By Daniel Binns, business reporter

The FTSE 100 has been propelled to another record high this morning after official figures showed that the UK is now out of recession.

The index, of the London Stock Exchange's 100 most valuable companies, is up more than 0.5% and hit an intraday (during the day) high of 8,433 points earlier.

The score is based on a calculation of the total value of the shares on the index.

It comes after officials revealed that gross domestic product (GDP) in the UK grew by a better-than-expected 0.6% during the first three months of the year. 

However, commentators said investors had been buoyed more by the rising cost of metals, along with suggestions from the Bank of England yesterday that interest rates could be cut soon . 

Russ Mould, from investment platform AJ Bell, said: "Given its international horizons, this has little to do with the UK's better-than-expected GDP growth and is largely being driven by strength in the resources space where higher metals prices and the promise of M&A [mergers and acquisitions] are helping to stoke share prices.

"The next key test of the index's new-found vim and vigour will likely come next week in the form of US inflation figures. Investors have broadly accepted rate cuts won't be as deep or come as soon as would have been anticipated at the start of the year. However, any signs inflation is proving much more stubborn than predicted would still represent a shock to the system for financial markets."

Among the movers on Friday is UK-based mining firm Anglo American. 

Its shares are up almost 2% after reports that industry giant Rio Tinto has been considering a multibillion-pound takeover of the firm. It comes after Anglo American rejected a bid from rival BHP.  

Meanwhile, shares in Vodafone are up more than 2% after the government conditionally approved its plans to merge with fellow mobile operator Three. However, an investigation into the deal by the UK's competition watchdog is still ongoing, meaning it’s not a done deal yet. 

On the flip side, property listings website Rightmove is down nearly 6% this morning. It comes after the company cut its advertising revenue growth estimates in a trading update.

Rightmove said higher mortgage rates and lengthier completion times for sales were likely to weigh on buyer sentiment in the coming months, but it also forecast a better year for the UK residential market as a whole.

On the currency markets, £1 buys $1.25 US or €1.16.

Sainsbury's is running a scheme that allows some shoppers to earn easy Nectar card points. 

To earn extra points, shoppers just need to spend £1 across multiple transactions at Sainsbury's this month. 

The supermarket says the scheme is available to "millions" of customers, though all it would say about the eligibility criteria is that it's "based on a range of factors".

Check if you're eligible

Log into your nectar card app and check to see if you have this message...   

Make sure you opt in once you see the message. 

From there, you simply need to spend £1 or more five times - earning extra points each time. 

The number of bonus points on offer varies for each customer.

The offer runs until 4 June. 

Britain is not just out of recession. 

It is out of recession with a bang.

The economic growth reported this morning by the Office for National Statistics is not just faster than most economists expected, it's also the fastest growth we've seen since the tailend of the pandemic, when the UK was bouncing back from lockdown.

But, more than that, there are three other facts that the prime minister and chancellor will be gleeful about (and you can expect them to be talking about this number for a long time).

First, it's not just that the economy is now growing again after two quarters of contraction - that was the recession. 

An economic growth rate of 0.6% is near enough to what economists used to call "trend growth", back before the crisis - in other words, it's the kind of number that signifies the economy growing at more or less "normal" rates. 

And normality is precisely the thing the government wants us to believe we've returned to.

Second, that 0.6% means the UK is, alongside Canada, the fastest-growing economy in the G7 (we've yet to hear from Japan, but economists expect its economy to contract in the first quarter).

Third, it's not just gross domestic product that's up. So too is gross domestic product per head - the number you get when you divide our national income by every person in the country. After seven years without any growth, GDP per head rose by 0.4% in the first quarter. 

And since GDP per head is a better yardstick for the "feelgood factor", perhaps this means people will finally start to feel better off.

But this is where the problems come in. 

Because while this latest set of GDP figures is undoubtedly positive, the numbers that came before are undoubtedly grim.

GDP per head is still considerably lower, in real terms, than it was in 2022, before Liz Truss's disastrous mini-budget, or for that matter lower than in early 2019.

Raising another question: when people think about the state of the economy ahead of the election (and obviously these new figures are likely to increase the speculation about the date of the election), do they put more weight on the years of economic disappointment or the bounce back after them?

Do they focus on the fact that we're now growing at decent whack or on the fact that their income per head is, in real terms, no higher today than it was five years ago?

These are the questions we will all be mulling in the coming months - as the next election approaches. One thing is for sure: this won't be the last time you hear about these GDP numbers.

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