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Simple Plans

[SIM-pul planz]

What is the definition of Simple Plans?
A SIMPLE Plan (Savings Incentive Match Plan for Employees) is a type of employer-sponsored retirement plan available to small businesses with fewer than 100 employees who received at least $5,000 in compensation in the preceding year. This plan allows employees and employers to contribute to individual retirement accounts (IRAs) set up for employees, typically offering tax benefits to both parties.
Using Simple Plans in an Example

A small business owner decides to establish a SIMPLE IRA plan to provide retirement benefits to their employees. Under this plan, both the employer and the employees can contribute to the retirement savings, with the employer making mandatory matching contributions or non-elective contributions.

Using Simple Plans in a sentence

Our company just started offering SIMPLE Plans, so now I can contribute to my retirement savings directly from my paycheck, and my employer will match my contributions up to a certain percentage.

Related Terms

Surviving Spouse

A person whose spouse has died within the tax year and who may file a joint tax return for that year. Additionally, the surviving spouse can file joint returns for the next two years if they remain unmarried and maintain a household as the principal residence for a dependent child.
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Swap

A financial contract in which two parties agree to exchange streams of payments over a specified period, based on different indices such as interest rates, foreign exchange rates, or equity indices, applied to a notional amount. Swaps typically do not involve the exchange of principal.
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