Retirement Investor Definitions SIMPLE 401(k)
A SIMPLE 401(k) plan is a 401(k) plan established by a small business for its employees. Earnings accrue on a tax-deferred basis and distributions are treated as ordinary income to the participant.
The following types of contributions can be made to a SIMPLE 401(k):
Employers are able to deduct employer contributions to the SIMPLE 401(k) plan, providing the contributions are within statutory limits.
Earnings on contributions accrue on a tax-deferred basis.
An employer is eligible to establish A SIMPLE 401(k) plan only if it had no more than 100 employees who earned $5,000 or more in the preceding year. This is referred to as the 100-employee limitation.
(Source: Retirement Dictionary)