Most small businesses with 100 or fewer employees can use a retirement savings plan that is called a SIMPLE IRA. “SIMPLE” represents “Savings Incentive Match Plan for Employees,” and “IRA” is for “Individual Retirement Account.”
A non-elective contribution of 2% of the employee’s salary, up to 3% of their salary, or a dollar-for-dollar matching contribution of the employee’s contributions can be made by the employer.
As of 2021, an employee can contribute a maximum of $13,500 annually.
An additional catch-up contribution of $3,000, allowing their annual maximum to $16,500 can be made by retirement savers of age 50 and above.
Every year the government will provide a maximum tax credit of $500, under the Setting Every Community Up for Retirement enhancement (SECURE)ACT of 2019, to employers who create a 401(k) or SIMPLE IRA plan with automatic enrollment.