Module 4 Overview
In 1996, Congress permitted smaller employers to offer a Savings Incentive Match Plan for Employees (SIMPLE plan) as a way to encourage retirement savings. SIMPLE plans, which may be structured as an IRA or 401(k) plan, allow employees to make “elective” salary deferral contributions to their retirement account. Employers must match or make nonelective contributions on behalf of employees.
Assets in the account grow tax-deferred and are taxed when eventually distributed. Employers may generally deduct contributions as a business expense. To encourage adoption, Congress exempts SIMPLE plans from the need to perform complex nondiscrimination testing and from compliance with burdensome top-heavy plan and reporting rules.
SIMPLE plans are available to employers with 100 or fewer employees who received at least $5,000 in compensation from the employer during the preceding year. This module covers the following topics. Click any topic to begin, or use the Next button at the bottom of each page to proceed in order.