What is a key feature of the SIMPLE retirement plan?

The SIMPLE retirement plan, which stands for Savings Incentive Match Plan for Employees, is designed specifically to be straightforward and easy to administer, particularly for small businesses. A key feature of the SIMPLE plan is that it has fewer administrative burdens compared to other retirement plans. This simplicity appeals to small business owners, as it allows them to provide retirement benefits to their employees without the complexity and costs often associated with larger retirement plans.

In addition to having reduced paperwork and compliance requirements, the SIMPLE plan also simplifies the contribution structure for both employees and employers, which means less time spent on managing the plan and more focus on running the business. This design is intentional, targeting small employers who may not have the resources to handle a more complex retirement plan.

While contribution limits and employer matching contributions are part of the SIMPLE plan, the defining trait is indeed its reduced administrative complexity, making it a practical choice for many small businesses.