What's the employer matching requirement?

Employers must either match employee contributions dollar-for-dollar up to 3% of compensation, or make a flat 2% nonelective contribution for all eligible employees regardless of whether they contribute.

Can I switch from a SIMPLE IRA to a 401(k)?

Yes, but you can only maintain one plan at a time. You can terminate the SIMPLE IRA and adopt a 401(k) effective January 1 of the following year. There's a 2-year waiting period before SIMPLE IRA funds can be rolled to a 401(k) without penalty.

What happens if an employee leaves?

The SIMPLE IRA belongs to the employee. They can leave it, roll it to another IRA (after 2 years), or withdraw it (subject to taxes and penalties if under 59.5 - and a 25% penalty if within the first 2 years).

How does the super catch-up work?

Starting in 2025 under SECURE 2.0, employees aged 60-63 can make an enhanced catch-up contribution of $5,250 (instead of the regular $4,000 catch-up for those 50+), on top of the $17,000 base for 2026.

Is a SIMPLE IRA easier to administer than a 401(k)?

Significantly easier. No annual Form 5500 filing, no nondiscrimination testing, lower setup and admin costs. The trade-off is lower contribution limits and less flexibility.

Business Owner

SIMPLE IRA

FREE to View

intermediate · $50K - $100K

SIMPLE IRA is a low-cost retirement plan for businesses with 100 or fewer employees.

Employees contribute up to $17,000, employers must match 1-3%.

Lower contribution limits than 401(k) but much simpler administration.

Annual Limit

$17,000 employee (+$4,000 catch-up if 50+, +$5,250 super catch-up if 60-63) - 2026

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Tax Benefit

Pre-tax employee contributions + employer match deduction

Requirements

100 or fewer employees
No other retirement plans
Employer must match contributions

How to Implement

1Set up SIMPLE IRA plan with provider
2Notify employees of plan details
3Employees elect contribution amounts
4Employer contributes (dollar-for-dollar match up to 3% of pay, or a flat 2% of pay for all eligible employees)

Frequently Asked Questions

Annual Limit

$17,000 employee (+$4,000 catch-up if 50+, +$5,250 super catch-up if 60-63) - 2026

Featured Providers

Fidelity
Vanguard
Schwab

Educational Only: This information is for educational purposes. Consult a qualified financial advisor or tax professional before implementing.

Last reviewed: April 2026

Related business owner strategies

Solo 401(k)Self-employed? Contribute up to $72,000/year across employee and employer contributions.SEP IRASelf-employed? Contribute up to 25% of income (max $72,000) with simple setup.Qualified Business Income (QBI) DeductionPass-through business owners can deduct up to 20% of qualified business income.

Sources

Internal Revenue Service, Rev. Proc. 2025-32
2026 inflation-adjusted amounts (tax brackets, standard deduction, estate & gift, FSA, credits)
Internal Revenue Service, Notice 2025-67
2026 retirement plan limits (401(k), IRA, SIMPLE, catch-up)
Internal Revenue Service, Rev. Proc. 2025-19
2026 HSA and HDHP inflation-adjusted limits

Educational information only. Not financial, tax, or legal advice or a recommendation. Figures are drawn from the primary sources cited above; verify current amounts with the source before acting.

SIMPLE IRA

Interactive Calculator

Tax Benefit

Requirements

How to Implement

Frequently Asked Questions

What's the employer matching requirement?

Can I switch from a SIMPLE IRA to a 401(k)?

What happens if an employee leaves?

How does the super catch-up work?

Is a SIMPLE IRA easier to administer than a 401(k)?

Annual Limit

Featured Providers

Related business owner strategies

Sources