Pros:

1. Easy to Administer: Simple IRAs are straightforward to set up and maintain, making them ideal for small businesses.

2. Employer Contributions: Employers are required to contribute either a matching contribution (up to 3% of employee's compensation) or a non-elective contribution (2% of employee's compensation) to employee accounts, which can help boost retirement savings.

3. Tax Advantages: Contributions are tax-deductible for both employers and employees, and earnings grow tax-deferred until withdrawal.

4. Higher Contribution Limits: Contribution limits are higher than traditional IRAs, allowing for greater retirement savings potential.

5. Employee Participation: All employees who have earned at least $5,000 in any two preceding calendar years and are expected to earn at least $5,000 in the current calendar year must be eligible to participate, encouraging employee retention.

SIMPLE IRA (Savings Incentive Match Plan for Employees)

Cons:

1. Limited Investment Options: Like other employer-sponsored retirement plans, Simple IRAs offer a limited selection of investment options compared to individual retirement accounts (IRAs).

2. Early Withdrawal Penalties: Withdrawals before age 59½ are subject to a 10% early withdrawal penalty, in addition to regular income tax.

3. Required Minimum Distributions (RMDs): Similar to traditional IRAs, Simple IRAs require account holders to start taking RMDs by April 1 following the year they turn 73 (or 70½ if they reached 70½ before January 1, 2020), which can impact retirement income planning.

4. Employer Contribution Requirement: Employers are required to contribute to their employees' accounts, which could be a disadvantage for some businesses, especially during financially challenging times.

Required Minimum Distributions (RMDs):

RMDs from Simple IRAs must begin by April 1 following the year you reach age 73 (or 70½ if you reached 70½ before January 1, 2020) and continue each year thereafter. The amount of the RMD is determined by dividing the account balance as of December 31 of the prior year by the distribution period based on the IRS Uniform Lifetime Table or Joint Life and Last Survivor Expectancy Table if applicable. Failure to take RMDs on time can result in substantial penalties.