Date of Award


Document Type


Degree Name

Doctor of Philosophy (PhD)



First Advisor

Anthony P. Curatola


Congress enacted legislation in 1978 (Revenue Act of 1978) that created a new type of retirement plan, the simplified employee plan. Congress believed that the administration costs associated with existing plans, especially qualified plans, were an undesirable obstacle to plan adoption and maintenance among small employers. Qualified plan participants, i.e., employees, in many cases are able to receive substantial reductions in the amount of tax due on retirement plan distributions. One of the primary differences between qualified plans and the simplified employee plans mentioned above is that under certain circumstances the tax due on distributions from qualified plans may be computed using a special federal averaging computation. Some states allow similar tax relief for distributions from qualified retirement arrangements. Simplified employee plans do not qualify for this preferential federal tax treatment. Therefore, even if simplified employee plans reduce the administration costs incurred by employers, the amount actually available to plan participants after taxes under a simplified employee plan may be substantially lower than the amount available to participants in qualified retirement plans. This paper describes a computer simulation of the costs small employers incur to provide after-tax retirement benefits to employees. These costs were analyzed to determine if simplified employee plans actually lowered the costs small employers incur. In this study, the after-tax costs small employers incur under both qualified plans and simplified employee plans were compared to determine if the creation of simplified employee plans achieved the congressional objective of cost reduction for small employers. Of particular interest were the tax costs small employers incur because of the various methods of taxing plan participants at the state level.