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SIMPLE Plans

The Savings Incentive Match for Employees (SIMPLE) retirement plan offers a variation on the SEP theme. In general, a SIMPLE plan may be adopted by employers who in the past year had 100 or fewer employees with at least $5,000 in annual compensation. Individual IRA accounts are set up for each participating employee. The employer cannot maintain any other type of qualified retirement plan. Employees can contribute through a salary deferral up to $11,500 for 2010, with an additional catch-up contribution of $2,500 if the participant is at least 50 years old. The employer must make a minimum required contribution and can choose between a matching and a non-elective contribution formula.

Year Contribution Limit 50+Catch-Up
2008 $10,500 $2,500
2009 $11,500 $2,500
2010 $11,500 $2,500