Ace Your Retirement Planning: CRPC Practice Exam 2025 – Plan, Play, Prosper!

For an employer contributions to a SIMPLE IRA, the requirement is that the employer must either match the employee’s contributions up to a specific limit or make a flat contribution instead. This means if an employee contributes $12,500 to their SIMPLE IRA, the employer is obligated to match that contribution dollar for dollar, but only up to a certain percentage of the employee’s compensation or to a capped amount determined by the Internal Revenue Service.

While it is important to understand the mechanism of matching contributions, it is crucial to note that while employers must make contributions, these contributions are structured in a way that allows them to either match the contributions or make a standard contribution for all eligible employees. The limit for the employer match is typically 3% of the employee's salary if they choose to match, not mandating that it must equal the employee's contribution as in the situation of an exact dollar-for-dollar match.

In summary, the characteristic that aligns with the question is that the employer is required to match the employee contribution, but it's important to realize that this is governed by specific limits and regulations around SIMPLE IRA contributions.