401(k) Plan Overview

Simple 401(k) plan

There are several types of 401k plans available to employers - traditional, safe harbor and SIMPLE. Different rules apply to each. It is important that you become familiar with your plan so that you understand the special rules that apply to you. The SIMPLE plan was created so that small businesses could have an effective, cost-efficient way to offer retirement benefits to their employees.

Employees who are eligible to participate in a SIMPLE 401k plan may not receive any contributions or benefit accruals under any other plans of the employer. These employer contributions can be subject to a vesting schedule which provides that an employee’s right to employer contributions becomes no forfeitable only after a period of time, or be immediately vested. Rules relating to Simple plans require that contributions made under the plan meet specific nondiscrimination requirements.