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Glossary Definition

What is a SIMPLE 401(k)?

SIMPLE (short for “Savings Incentive Match Plans for Employees of Small Employers”) 401(k) plans allow businesses to offer a salary-deferral retirement plan to employees without being subject to the nondiscrimination and “top-heavy” rules that make traditional 401(k) plans more difficult and costly to administer. SIMPLE 401(k) plans are an option for businesses with no more than 100 employees who earned at least $5K in the previous calendar year, as long as the firm does not offer any other retirement plans. SIMPLE plans have lower contribution limits than traditional 401(k)s.

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