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 $5,400.
II.Match the employee's contribution up to a maximum of 3 percent of the employee's compensation with a maximum contribution of $12,500.

A)Only I is correct.
B)Only II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question

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 $5,400.
II.Match the employee's contribution up to a maximum of 3 percent of the employee's compensation with a maximum contribution of $12,500.
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A)Only I is correct.
B)Only II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Quizplus · Accepted Answer

Both statements are correct. A company can choose to contribute either 2% of an employee's salary up to a maximum of $5,400 or match the employee's contribution up to a maximum of 3 percent of the employee's compensation with a maximum contribution of $12,500. The company can also choose to do both types of contributions, but the total contribution cannot exceed $58,000 for 2021.

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