SIMPLE stands for Savings Incentive Match Plan for Employees. It is a retirement plan that may be established by employers. The employer is allowed a tax deduction for contributions made to the SIMPLE IRA. The employer usually makes matching contributions to employee’s SIMPLE IRA and employees may make salary deferral contributions.
Specifically, employers with less than 100 employees earning at least $5,000 per year who do not offer other retirement plans can offer SIMPLE IRA. Self-employed workers are also eligible. Employees can contribute up to $10,000 per year into the account, with the exception that employees who are at least 50 years old can contribute up to $12,500.