Simple Employer limit for 2001

[Guest Pinestream]

What is the 2001 employer limit for SIMPLE Plans. I realize that $6,500 is the employee limit, but have not seen anything regarding the employer limit.

Thanks in advance for your assistance.

[wmyer]

For SIMPLE 401(k) plans, the 2001 limit will be 170,000x3% or $5,100 for matching; and 170,000x2% or $3,400 for the nonelective. For SIMPLE IRAs, the 2001 limit will also be $3,400 for the nonelective. The matching can max out at $6,500, assuming a salary in excess of $216,666.66.

[Guest sheadan]

Can you tell me where the $216,666 is referenced in the code in regards to matching for the simple plans?

[wmyer]

That number is not specifically mentioned. Because the 401(a)(17) limit does not apply to SIMPLE IRAs, the match is not limited to 3% of 170,000. But the match cannot exceed the amount of actual deferral, so the match can be at most $6,500 as long as the compensation is high enough to merit a $6,500 match at 3%. The only way you can get $6,500 into match with a match equal to 100% up to 3% of compensation is if your compensation is 216,666.67 or more (.03*216,666.67=$6,500).