The SIMPLE 401(k) is available to those same employers who are eligible to adopt a traditional 401(k) plan: this includes sole proprietors, partnerships and corporations. However, while there is no restriction on the number of employees for the traditional 401(k) plan, only employers who adhere to the 100-employee limit can adopt a SIMPLE 401(k) plan. Under the 100-employee limitation rule, a SIMPLE may be established by an employer that had no more than 100 employees who received at least $5,000 in compensation for the preceding year.

Employees who are at least 21 years old and have completed at least one year of service must be allowed to participate in the SIMPLE 401(k) plan. A SIMPLE 401(k) must be established between Jan 1 and Oct 1. An exception applies to businesses that come into existence after Oct 1. For these businesses, the plan can be established as soon as administratively feasible.