SIMPLE Retirement Accounts (SIMPLE IRAs)

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SIMPLE Retirement Accounts (SIMPLE IRAs)

The savings incentive match plan for employees (SIMPLE IRA) is sponsored by employers and is a replacement for salary reduction simplified employee pensions (SARSEPS). The employer may set up IRAs for individual employees. The employer makes annual contributions by:

• matching up to 3% of pay for employees who contribute, or
• contributing 2% of pay for all employees whether they contribute or not.

Contribution limits

Employee contributions are limited to the lesser of $16,500 for 2025 or 100% of compensation. Employees age 50 or over may make additional catch-up contributions of $3,500. Starting in 2025, employees age 60 to 63 can make a catchup contribution of up to $5,250 instead.

The Secure 2 Act, passed in late 2022, now allows Roth versions of SIMPLE IRAs.