What is the maximum number of employees earning at least $5,000 for an employer to start a SIMPLE retirement plan?

The correct answer is the option that states the maximum number of employees earning at least $5,000 for an employer to start a SIMPLE (Savings Incentive Match Plan for Employees) retirement plan is 100.

A SIMPLE retirement plan is specifically designed for small businesses and allows eligible employers to set up a retirement savings plan for their employees without the complexities associated with other retirement plans. One of the primary criteria for employers to be able to establish a SIMPLE plan is the size of the workforce. Under IRS guidelines, an employer may initiate a SIMPLE retirement plan if they have 100 or fewer employees who earned at least $5,000 during the preceding calendar year. This criterion ensures that the plan remains manageable for smaller businesses.

If an employer has more than 100 employees meeting that income threshold, they are generally required to look into other retirement plan options that can accommodate a larger workforce effectively, as the SIMPLE plan is inherently designed for smaller groups. The focus on the maximum employee count helps maintain the SIMPLE plan's simplicity and flexibility, which are its primary benefits.