Incentives

Incentives

Description and Definition of SIMPLE (Savings Incentive Match Plan for Employees)

A retirement plan that allows employees of small firms with 100 or fewer employees and self-employed individuals to make salary reduction contributions to an IRA. The employer generally must match employee contributions up to 3%, or contribute 2% of pay for each employee regardless of whether or not they contribute on their own. Contributions cannot exceed $6,000 per year, and the contributions must be a percentage of the participant's earnings that is specified by the participant. The rules are simpler than for other tax-qualified retirement plans. A self employed person with no employees could open a SIMPLE plan and contribute up to $6,000 of self employment earnings.

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