Chapter 3
SIMPLE Plans

• Topics and Useful Items

A savings incentive match plan for employees (SIMPLE plan) is a written arrangement that provides you and your employees with a simplified way to make contributions to provide retirement income. Under a SIMPLE plan, employees can choose to make salary reduction contributions to the plan rather than receiving these amounts as part of their regular pay. In addition, you will contribute matching or nonelective contributions.

SIMPLE plans can only be maintained on a calendar-year basis.

A SIMPLE plan can be set up in either of the following ways.

• Using SIMPLE IRAs (SIMPLE IRA plan).
• As part of a 401(k) plan (SIMPLE 401(k) plan).

Many financial institutions will help you set up a SIMPLE plan.

• SIMPLE IRA Plan
• SIMPLE 401(k) Plan

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