Tennessee Insurance Practice Exam 2026 – All-in-One Resource for Exam Success!

A Savings Incentive Match Plan for Employees (SIMPLE) retirement plan is typically designed for small businesses to encourage employee participation in retirement savings. The critical feature that defines eligibility for establishing a SIMPLE plan is based on the number of employees.

An employer can set up a SIMPLE retirement plan if they have 100 or fewer employees who earned $5,000 or more in compensation during any two preceding calendar years. The plan provides an accessible way for small businesses to offer retirement benefits without the complexities and costs associated with larger retirement plans.

The option indicating 100 employees reflects this regulation and aligns with the guidelines established for SIMPLE plans, ensuring that smaller employers can provide essential retirement savings options to their employees effectively. Other numbers do not meet the criteria specified in IRS regulations for SIMPLE plans.