Connecticut Life Producer Practice exam

What is the maximum number of employees that can participate in a SIMPLE plan?

1. 50 employees

2. 75 employees

3. 100 employees

4. 150 employees

The correct answer is: 100 employees

A SIMPLE (Savings Incentive Match Plan for Employees) plan is designed specifically for small businesses to offer retirement savings options. The maximum number of employees that can participate in a SIMPLE plan is capped at 100. This limit ensures that the plan remains accessible for smaller employers, promoting wider participation and compliance with federal regulations. The rationale behind the restriction to 100 employees is to maintain the simplicity and cost-effectiveness of the plans for smaller companies. Once a business exceeds 100 employees, it is typically encouraged to explore other retirement plan options that are better suited for larger organizations, which often have more complex needs and can support more robust retirement plans. Understanding this aspect is essential for anyone involved in managing employee benefits within small businesses, including life insurance producers and financial advisors, as it helps guide them in recommending appropriate retirement solutions based on the size and structure of the organization.