What is a characteristic of a SIMPLE plan?

A SIMPLE plan, which stands for Savings Incentive Match Plan for Employees, is specifically designed to meet the needs of small employers. The defining characteristic of a SIMPLE plan is that it is intended for companies with 100 or fewer employees. This makes it an appealing option for smaller businesses that want to provide retirement benefits to their employees without the complexities associated with larger plans.

The focus on small employers is crucial because it ensures that these businesses can offer competitive retirement benefits without facing the regulatory burdens that typically accompany larger employer retirement plans. Additionally, the structure of a SIMPLE plan allows employees to contribute to their retirement while also ensuring that employers can match those contributions in a manageable way, thus fostering a supportive environment for retirement savings among small business employees.