Which best describes the main characteristics of SIMPLE plans?

The main characteristics of SIMPLE (Savings Incentive Match Plan for Employees) plans revolve around their purpose and the size of the employers that can adopt them. These plans are specifically designed to give small businesses a way to set up retirement plans that are easy to administer and maintain. The key eligibility criterion is that they are intended for employers with 100 or fewer employees who earned at least $5,000 in the preceding calendar year. This makes the option focusing on employers with a cap of 100 employees the correct choice.

SIMPLE plans provide a simplified approach to saving for retirement while encouraging employee participation through required employer matching contributions and allowing employees to contribute via salary reductions. The structure of these plans helps small businesses enhance employee retention and satisfaction without the administrative burdens typically associated with larger retirement plans.