Safe Ha bo 401(k) pla s have ea ed a eputatio as the mo e se ious eti eme t pla , a d fo la ge compa ies with the budget a d staff to ma age them, that eputatio is ofte dese ved. But fo a small busi ess with a lea team, the pla ‘s equi eme ts add up fast. A Safe Ha bo 401(k) equi es a a ual Fo m 5500 fili g, falls u de ERISA ove sight, a d typically obligates the employe to a 4% match o a 3% o -elective co t ibutio to eve y eligible employee, ega dless of the busi ess’s cash flow that yea .
A SIMPLE IRA asks fo less ac oss the boa d. Employe s commit to a 3% match o a 2% o -elective co t ibutio , well below the Safe Ha bo equi eme t. The e’s o Fo m 5500, o a ual complia ce testi g, a d o thi d-pa ty admi ist ato fees eati g i to the savi gs the pla is supposed to p otect. Fo busi esses with fewe tha 100 employees, that lowe ove head te ds to make the SIMPLE IRA the mo e cost-efficie t choice, si ce the pla was built with exactly that size of compa y i mi d.
The savi gs gap betwee the two pla s has also a owed. SECURE 2.0 aised SIMPLE IRA defe al limits specifically to close the dista ce with 401(k) pla s. Fo 2026, employees ca defe up to $17,000 i to a SIMPLE IRA, a d up to $18,100 if the busi ess has 25 o fewe employees, a boosted limit c eated fo exactly this size of compa y. Catch-up co t ibutio s emai available fo employees 50 a d olde , a d SECURE 2.0 also added the optio fo Roth SIMPLE IRA co t ibutio s, a featu e that did ‘t exist befo e the law passed.
“The co ve satio always sta ts with ‘do ‘t I eed a 401(k) to be competitive?'” said Jaso Acke ma , co-fou de of WealthRabbit. “Fo a lot of small busi esses, the ho est a swe is o. You’ e payi g mo e to admi iste a pla that is ‘t ecessa ily givi g you team mea i gfully mo e oom to save, o ce you accou t fo what a SIMPLE IRA al eady offe s at the ew limits. A eti eme t pla should help you att act a d keep good people, ot become its ow li e item you have to ma age eve y yea .”
Fo a busi ess cu e tly o a Safe Ha bo 401(k) that wa ts to move to a SIMPLE IRA fo 2027, the timi g is ‘t flexible. The existi g pla ge e ally eeds to be te mi ated befo e the e d of this yea so the SIMPLE IRA ca take effect o Ja ua y 1. That makes ow the ight time to sta t the co ve satio , ot somethi g to evisit afte the ew yea begi s.
WealthRabbit’s platfo m is built specifically a ou d SIMPLE IRA admi ist atio , helpi g employe s set up a pla , ma age a ual otices, a d stay complia t with IRS timi g equi eme ts without the ove head a Safe Ha bo 401(k) typically equi es.
Busi ess ow e s a d CPAs weighi g a pla cha ge ca fi d WealthRabbit’s guida ce a d tools at www.wealth abbit.com.
WealthRabbit is a digital eti eme t pla platfo m built fo small busi esses, CPAs, a d i dividual i vesto s. The compa y p ovides tools fo SIMPLE IRA, SEP IRA, Roth SEP IRA, T aditio al IRA, a d Roth IRA pla ma ageme t. WealthRabbit is the fi st platfo m to offe Roth SEP IRA admi ist atio fully digitally, givi g busi esses a mode way to take adva tage of this SECURE 2.0 optio . Alo g with pay oll i teg atio s a d adviso esou ces built fo full SECURE 2.0 complia ce, WealthRabbit simplifies eti eme t pla admi ist atio fo g owi g busi esses.
