If you're self-employed, or if you run a small business, retirement can be a scary topic to think about -- especially without traditional sources of retirement savings like a pension or 401(k).

Source: 401kcalculator.org via Flickr.

However, there are certain types of accounts designed just for people like you. And as the name implies, the easiest of these to start and maintain is a SIMPLE IRA. This type of an IRA, whose name is an abbreviation for "Savings Incentive Match Plans for Employees," is designed to be an easy-to-establish option for employers and employees who don't currently have an employer-sponsored retirement plan.

So how do you set up one of these accounts? How much can your employees contribute, and how much can you contribute on their behalf? And how do the vesting and withdrawal rules work?

Let's go over all of that and more.

A SIMPLE IRA in a nutshell
A SIMPLE IRA is available to any small business, which typically means 100 employees or fewer. Self-employed individuals are also eligible and are considered both the employer and employee for the purposes of contributions.

Employers have two options when it comes to their contributions. However, they are always required to contribute.

The first option is to establish a matching contribution plan, under which they will match employees' contributions dollar-for-dollar up to 3% of compensation. Or they can choose a 2% "nonelective" contribution, which means that even if the employees choose not to contribute any of their salary to the plan, the employer still contributes 2% of each employee's salary. Under both employer contribution arrangements, the maximum amount of an employee's compensation that can be used to calculate the percentage is $260,000 for the 2014 tax year.

As far as how much employees can contribute, the current rules allow for employee contributions of up to $12,000 for the 2014 tax year, with participants over 50 years old allowed an additional $2,500 "catch-up" contribution. Employees can also choose not to contribute at all.

So, using the higher 3% dollar-for-dollar match rate, the maximum total amount that can be deposited into a SIMPLE IRA works out to $24,000 per year, or $26,500 if you're over 50.

Tax treatment and withdrawal rules
Basically, a SIMPLE IRA is very similar to a traditional IRA in terms of the tax treatment and withdrawal rules.

In both cases, contributions are made on a tax-deferred basis. What this means is that qualifying contributions can be deducted from your taxes during the year in which the contributions are made, but withdrawals will be taxed as ordinary income. And your money compounds year after year without your having to worry about paying taxes on dividends and gains on investments you've sold.

Withdrawals can be made penalty-free at any time after the employee reaches 59-1/2 years of age, and tapping into a SIMPLE IRA before that time could result in a 10% penalty from the IRS.

However, there are some exceptions to this rule, many of which do not apply to traditional IRA accounts. For example, you are allowed to withdraw money early from a SIMPLE IRA to pay for qualified education expenses or toward a down payment on your first home. There is a full list of exceptions to the 10% penalty here.

How to get started
According to the IRS, there are three steps to establishing a SIMPLE IRA. First, you have to execute a written agreement to provide benefits to all eligible employees. The IRS provides the forms and requires you to fill them out and sign them, along with your designated financial institution, if you have one.

Then you have to send out an annual notice to employees, which details your contributions and the choices the employees have when it comes to elective deferments.

Finally, you'll need to set up a SIMPLE IRA for each employee through an eligible financial institution.

The IRS provides a more thorough guide for those who might be interested, but the process and the forms involved are rather simple and easy to understand.

Other options, and the pros and cons of each
There are a few other types of retirement plans for self-employed individuals and small-business owners, and each has its own pros and cons.

For example, a Simplified Employee Pension IRA, or SEP, is another popular choice and has higher contribution limits of up to $52,000 per year. However, only the employer is allowed to make contributions, so it is not a good choice for offering your employees flexibility in their saving habits.

Other options include individual 401(k) plans, which can have limited investment options. And there are some other options like traditional and Roth IRAs that allow payroll deduction, profit-sharing plans, and employee stock-ownership plans. However, none of the other options is as easy to implement and maintain as a SIMPLE IRA.

So if you are looking for the best retirement plan for yourself or your small business, a SIMPLE IRA could be just what you're looking for.