3% match -- Under this option, employees make pre-tax contributions (with FICA and FUTA still paid), capped for 1998 at $6,000. The employer matches these contributions dollar-for-dollar, up to the $6,000 or 3% of the employee's total compensation, whichever is less.

That's $12,000 a year an employee can save toward retirement...growing and compounding without current taxation.

The 3% match provision is not only attractive to current employees, but is a strong retirement plan benefit so important to recruiting quality individuals.

Employers also receive a tax deduction for all employee contributions they match. And the 3% option in IRA form, rather than 401(k), gives employers the flexibility to respond to business conditions by periodically capping the annual match rate at a level as low as 1% of compensation by following certain guidelines.

Employees maintain the freedom to defer a portion of their compensation and receive the mandatory dollar-for-dollar match from their employer.

But perhaps the best benefit of the 3% formula is the one that applies equally to employers and employees -- a distinct difference from previous deferred compensation plans: there is no "participation" rule with SIMPLE. Historically, employers and workers wanting to defer compensation under a SARSEP couldn't unless at least 50% of the company's qualified employees deferred compensation, too. As long as every employee has the opportunity to participate, SIMPLE plans work for as few as a single individual.

2% non-elective -- The employer contributes a flat 2% of total compensation -- capped at $3,200 for 1998-- to each employee's account. In addition, an employee may also defer compensation up to $6,000 into the account. Each employee maintains some control over his or her saving, but receives the $3,200 employer-funded amount whether they defer or not. It's speculated that this option will serve as an especially powerful recruiting tool for new companies trying to attract the best employees.