Small-business retirement plans
A “savings incentive match plan for employees,” or SIMPLE, 401(k) plan limits employer contributions to either a dollar-for-dollar matching contribution, up to 3 percent of pay; or a nonelective contribution of 2 percent of pay for each eligible employee. No other employer contributions can be made to a SIMPLE 401(k) plan. These plans are not subject to annual nondiscrimination testing. In SIMPLE 401(k) plans, all required employer contributions are always 100 percent vested. Employees also cannot participate in any other retirement plan of the employer.
The maximum amount that employees can contribute to their SIMPLE 401(k) accounts is $11,500 in 2012. An additional catch-up contribution of $2,500 is allowed for employees aged 50 and over.