A company that maintains a SIMPLE-401(k)has the option of funding the plan by
I.Contributing 2% of an employee's salary up to a maximum of $5,100.
II.Match the employee's contribution up to a maximum of 3 percent of the employee's compensation with a maximum contribution of $12,000.
A)Only I is correct.
B)Only II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question

Quizplus · Accepted Answer

Both statement I and II are correct. The company can choose to fund the SIMPLE-401(k) plan by either contributing 2% of an employee's salary up to a maximum of $5,100 or matching the employee's contribution up to a maximum of 3 percent of the employee's compensation with a maximum contribution of $12,000. The company can choose either option, or a combination of both, but cannot exceed the maximum limit of $12,000.

A Company That Maintains a SIMPLE-401(k)has the Option of Funding