In a SIMPLE Plan, the "SIMPLE" stands for Savings Incentive Match Plan for
Employees of Small Employers.
A SIMPLE plan is a plan in which a small
business with one hundred or fewer employees can offer retirement benefits
through employee salary reductions and matching contributions, similar to those
found in a 401k plan.
The SIMPLE Plan can be either a SIMPLE IRA or a SIMPLE 401k. SIMPLE IRA plans
impose few administrative burdens on employers because IRAs are owned by the
employees and the bank or financial institution receiving the funds does most of
the paperwork. While each has some different features, including contribution
limits and the availability of loans, required employer contributions are
immediately 100 percent vested in both.
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