A Savings Incentive Match Plan for Employees plan, better known as a SIMPLE plan, is an IRA-based retirement plan available to employers with fewer than 100 employees.

Under a SIMPLE IRA plan, an employee can contribute a portion of his pay to his SIMPLE IRA account. An employee can make a maximum contribution of $9,000, ($10,500 if age 50 and over), to his SIMPLE IRA account for 2004. You, the employer, are required to make a contribution for every worker who receives $5,000 or more in compensation.

You can match up to 3% of the salary for the employees who contribute to their SIMPLE IRA account. You only have to match for those employees who contribute to the plan. In any 2 years out of a 5 year period, after notification to the employees, you may elect a lower matching contribution percentage but not less than 1% of salary.

Your business also has the option to select a