401k Administration: Which Option Allows the Easiest Set Up?

The SIMPLE 401k offers the lowest levels of 401k administration costs and forms. Prior to the option for the SIMPLE 401k, small businesses were often ineligible for providing 401ks because of their high cost per employee. Now, with the reduced maintenance and paperwork requirements on the SIMPLE plan, even a small employer can offer the account structure.


To be eligible for the SIMPLE 401k, you must have fewer than 101 employees at your organization. This is not including individuals earning less than $450 per year, or working less than part-time. If your business grows beyond this level, you will be able to transition to a standard 401k, over the period of two years.


If you do not want the expense of managing a 401k account but are still looking for a viable option, consider the SIMPLE IRA. The SIMPLE IRA provides the same low cost and low administration, but with this option you do not have to manage the investment accounts. Your employees set up and manage their own accounts, and you are solely responsible for payroll contributions and matching funds. This option is best for an employer who wants to offer the benefit but does not want to be involved in its management.