What is a defining characteristic of SIMPLE Plans?

SIMPLE Plans, or Savings Incentive Match Plan for Employees, are designed specifically for small businesses. The defining characteristic is that they are intended for establishments with fewer than 100 employees. This makes them an accessible retirement savings option for small business owners and their employees, allowing for easier plan administration and lower costs compared to more complex retirement plans typically suited for larger firms.

In addition to the employee count, SIMPLE Plans also involve employer contributions, where an employer matches employee contributions up to a certain percentage or makes a flat contribution. This offers both the employer and employees an incentive to save for retirement, fostering a culture of financial planning within smaller organizations.

The other options reflect incorrect aspects of SIMPLE Plans; for example, these plans are not designed for large businesses, they are not limited to providing benefits exclusively for retirees, and they do allow contributions from both the employee and employer, not just the employee's paycheck.