Individual(k) and SIMPLE Plans

Individual 401(k) and SIMPLE Plans

Individual 401(k)

Also referred to as a Solo 401(k) or Owner-only 401(k), these plans are ideal for the self-employed or small business owner with no full-time employees other than a spouse. The attractive feature of an Individual 401(k) is the ability to defer the IRS maximum and then to make a deductible employer contribution up to 25% of total compensation. In addition, Individual(k)’s are not subject to the complicated administrative rules and testing that are required of regular 401(k) plans.

SIMPLE 401(k)

This plan type is for small businesses with 100 or fewer employees and provides for salary deferrals and required employer contributions. Employers may choose to contribute either a matching contribution up to 3% of employee’s compensation or a non-elective contribution of 2% to all eligible employees. The salary deferral limits for a SIMPLE plan are less than a traditional 401(k). SIMPLE 401(k) Plans are not subject to nondiscrimination testing but plan sponsors must file a Form 5500.


Savings Incentive Match Plan for Employees or a SIMPLE Plan is a way for employees and employers to make contributions to traditional Individual Retirement Accounts (IRAs) subject to certain limits. Employers establishing a SIMPLE cannot have more than 100 employees and have discretion over making an employer match or non-elective contribution. There are no testing or filing requirements for a SIMPLE plan making it a viable start-up retirement plan option.