What type of contributions does a SIMPLE plan primarily feature?

A SIMPLE plan, which stands for Savings Incentive Match Plan for Employees, primarily features matching and non-elective contributions. This retirement plan is designed for small businesses with fewer than 100 employees and provides a tax-advantaged way for employees to save for retirement.

In a SIMPLE plan, employees can make salary deferral contributions, but the hallmark of this plan is the employer's obligation to either match employee contributions up to a certain percentage or make a non-elective contribution of 2% of the employee’s compensation, regardless of whether the employee contributes. This structure encourages employee participation while ensuring that the employer contributes to the employees' retirement savings as well.

While salary deferrals are a component of the SIMPLE plan, the key defining features involve the employer’s contributions, making the option focusing on matching and non-elective contributions the most accurate choice in this context. Other types of contributions such as profit-sharing contributions or employer stock options do not apply to the nature and structure of a SIMPLE plan.