Final answer:
A SIMPLE IRA would meet Margaret's requirements for a retirement plan that allows employee contributions while keeping employer contributions low. It is designed for small businesses, enabling employees to contribute to their retirement with a lower employer contribution cap.
Step-by-step explanation:
Margaret is looking for a retirement plan for her business that allows employee contributions but keeps employer contributions low. She is interested in an IRA plan. In this case, the SIMPLE IRA would be the most appropriate option. The SIMPLE IRA (Savings Incentive Match Plan for Employees Individual Retirement Account) is designed for small businesses and allows employees to make contributions to their own retirement savings. The employer can match employee contributions up to a certain limit, which is typically lower than other retirement plan contributions, such as those in a 401(k). Therefore, a SIMPLE IRA would satisfy Margaret's requirements by permitting employee contributions and maintaining lower employer contribution costs.
The Simplified Employee Pension (SEP) Plan is another type of IRA that permits employers to make contributions to their employees' retirement. However, the SEP Plan tends to involve higher employer contributions than the SIMPLE IRA, as it is solely funded by the employer. Given that Margaret wants to keep employer contributions low, the SEP Plan might not be as suitable for her needs compared to the SIMPLE IRA.