How Are Contributions Made? Contributions under a salary reduction agreement are called salaryreduction contributions. They are made on your behalf by youremployer. Your employer must also make either matching contributionsor nonelective contributions. Salary reduction contributions.During the 60-day period before the beginning of any year, andduring the 60-day period before you are eligible, you can choosesalary reduction contributions expressed either as a percentage ofcompensation, or as a specific dollar amount (if your employer offersthis choice). You can choose to cancel the election at any time duringthe year. Your employer cannot place restrictions on the contributions amount(such as by limiting the contributions percentage), except to complywith the salary reduction contributions limit, discussed later. Matching contributions.Unless your employer chooses to make nonelective contributions,your employer must make contributions equal to the salary reductioncontributions you choose (elect), but only up to certain limits. SeeHow Much Can Be Contributed on My Behalf?, later. Thesecontributions are in addition to the salary reduction contributionsand must be made to the SIMPLE IRAs of all eligible employees (definedearlier) who chose salary reductions. These contributions are referredto as matching contributions. Matching contributions on behalf of a self-employed individual arenot treated as salary reduction contributions. Nonelective contributions.Instead of making matching contributions, your employer may be ableto choose to make nonelective contributions on behalf of all eligibleemployees. These nonelective contributions must be made on behalf ofeach eligible employee who has at least $5,000 of compensation fromyour employer, whether or not the employee chose salary reductions. One of the requirements your employer must satisfy is notifying theemployees that the election was made. For other requirements that youremployer must satisfy, see Publication 560.