SIMPLE Plans

What Does SIMPLE Plans Mean?

A SIMPLE plan is a retirement plan typically offered by companies with 100 or fewer employees. SIMPLE stands for Savings Incentive Match Plan for Employees of Small Employers. In the context of insurance, insurance companies often act as trustees, managing SIMPLE plans on behalf of the employer. In those arrangements, the contributions are usually invested in an annuity issued by the same carrier, which is how the savings grow tax-deferred until the employee retires.

Insuranceopedia Explains SIMPLE Plans

SIMPLE plans are designed to allow businesses to match employee contributions to these retirement accounts or make other types of contributions. These plans often come with tax credits, providing an additional incentive for businesses to adopt them. Employees benefit from SIMPLE plans as they help them save and prepare for retirement, with matching contributions from the employer offering added support. Administrative costs for SIMPLE plans are typically low, making them an affordable option for many small businesses. Owners running the numbers often compare the plan’s setup costs against their other recurring expenses, such as payroll and small business insurance.