How many employees can participate in SIMPLE plans?

A SIMPLE (Savings Incentive Match Plan for Employees) plan is designed for small businesses, allowing them to offer retirement savings plans to their employees. To qualify for a SIMPLE plan, an employer must have 100 or fewer employees who were paid at least $5,000 in the preceding calendar year. This limit is crucial as it ensures that the benefits of this simplified retirement plan are directed towards smaller businesses, which often face challenges in providing retirement benefits.

The characteristic that defines the SIMPLE plan is this employee limit of 100, making it an appealing option for small business employers who wish to provide retirement plans without the complexity and costs associated with larger plans. This is why the correct answer reflects the maximum number of employees that can participate in such a plan. Employers must carefully consider this limit when deciding if a SIMPLE plan is appropriate for their business structure and size.