What is the maximum number of employees earning at least $5,000 that can participate in a SIMPLE retirement plan?

The maximum number of employees earning at least $5,000 that can participate in a SIMPLE (Savings Incentive Match Plan for Employees) retirement plan is capped at 100. This limit is significant because SIMPLE plans are designed to offer a straightforward and accessible retirement savings option for small businesses, and this employee limit ensures that only smaller enterprises can take advantage of their simplified features, such as easier administration and lower compliance costs compared to traditional plans.

In the context of a business with more than 100 employees, participating in a SIMPLE plan would no longer be permissible, primarily because it could introduce greater complexity and administration burdens that contradict the purpose of these plans. Hence, only businesses with 100 or fewer employees, specifically those who earn at least $5,000, are eligible to utilize this type of retirement plan.

This guideline helps differentiate SIMPLE plans from other types of retirement plans, such as 401(k)s, which can have different eligibility requirements regarding employee counts and income thresholds.