SIMPLE IRA Calculator
A SIMPLE IRA (Savings Incentive Match Plan for Employees) is a retirement savings plan available to businesses with 100 or fewer employees that provides a simpler, lower-cost alternative to a 401(k). For 2025, employees can defer up to $16,500 of their salary into a SIMPLE IRA, with an additional catch-up contribution of $3,500 available for those aged 50 and older. Under SECURE 2.0, employees aged 60 through 63 may be eligible for an enhanced catch-up limit of up to $5,250 in 2025. Employers must choose one of two matching formulas and apply it uniformly to all eligible employees: either match employee contributions dollar for dollar up to 3% of each employee's compensation (which can be reduced to 1% in up to two of every five years), or make a non-elective contribution of 2% of compensation for every eligible employee regardless of whether they contribute. Employee contributions reduce taxable income in the year contributed, and employer contributions are immediately vested in most SIMPLE IRA plans. Early withdrawals in the first two years of participation incur a 25% penalty rather than the standard 10%; after two years the standard 10% early withdrawal penalty applies. This calculator shows the maximum employee deferral, employer match or non-elective contribution under both formula options, the total annual SIMPLE IRA contribution, the income tax saving, and the projected balance at retirement.
Annual salary of $75,000, age 55, with 3% match: total annual contribution is --.
SIMPLE IRA contribution limits and calculation
A SIMPLE IRA combines employee deferrals with employer contributions. Employees can contribute salary deferrals up to annual limits, and the employer provides either a matching contribution or a non-elective contribution for all eligible employees.
2025 contribution limits
- Employee deferrals: $16,500
- Catch-up (age 50+): +$3,500 = $20,000
- SECURE 2.0 super catch-up (ages 60-63): +$5,250 = $21,750
- Employer 3% match: Up to 3% of compensation (dollar-for-dollar match, no limit)
- Employer 2% non-elective: 2% of all eligible employees' compensation
Example calculation
Annual salary $75,000, age 55 (eligible for $3,500 catch-up), employee defers 5%, employer 3% match:
- Employee standard deferral = $75,000 x 5% = $3,750
- Employee catch-up = $3,500
- Employee total = $3,750 + $3,500 = $7,250
- Employer match = $75,000 x 3% = $2,250
- Total annual contribution = $7,250 + $2,250 = $9,500
SIMPLE IRA for employers and employees
For employers, a SIMPLE IRA is one of the most accessible retirement plan options. It requires minimal administrative overhead: no annual Form 5500 filing, no complex nondiscrimination testing, and straightforward contribution calculations. Many custodians provide templates and payroll integration to simplify setup.
For employees, a SIMPLE IRA is a valuable benefit because the employer-provided match or non-elective contribution is essentially free retirement savings. Combined with your own deferrals, a SIMPLE IRA can accumulate substantial retirement assets over a career, especially when paired with catch-up contributions at age 50.
One important consideration: SIMPLE IRA balances have early withdrawal restrictions during the first two years of participation (6% penalty, up from 10%). After two years, standard IRA rollover and early withdrawal rules apply. This encourages longer-term participation in the plan.
SIMPLE IRA: frequently asked questions
What is a SIMPLE IRA?
A SIMPLE IRA (Savings Incentive Match Plan for Employees) is a qualified retirement plan available to employers with 100 or fewer employees. Employees contribute through salary deferrals, and employers must contribute either a dollar-for-dollar match (up to 3% of compensation) or a non-elective contribution of 2% for all eligible employees. SIMPLE IRAs are simpler to set up and maintain than traditional 401k plans.
What is the difference between the 3% match and the 2% non-elective option?
With the 3% match option, the employer matches employee contributions dollar-for-dollar up to 3% of compensation. The employer can reduce this to 1% in up to two of every five years. With the 2% non-elective option, the employer contributes 2% of compensation for all eligible employees regardless of whether the employee contributes. The non-elective option is simpler for low-participation employers.
Are SIMPLE IRA employees subject to the same limits as other IRAs?
No. SIMPLE IRA contributions are not subject to the $7,000 IRA contribution limit (for 2025). Instead, the SIMPLE IRA has its own limit of $16,500 for employee deferrals (or $20,000 with catch-up at age 50+). Employer contributions do not count against the employee deferral limit.
Can I roll over a SIMPLE IRA to another type of plan?
Yes, but with restrictions. SIMPLE IRA balances cannot be rolled to a traditional or Roth IRA until two years after the date you first participated in the SIMPLE IRA. After the two-year period, rollovers are allowed without penalty. Distributions and rollovers during the two-year window may be subject to higher early withdrawal penalties.
What are the deadlines for SIMPLE IRA contributions?
Employee deferrals are generally made throughout the year as part of the payroll process. Employer contributions (match or non-elective) must be deposited by the tax return filing deadline (including extensions) for the tax year, typically April 15 or October 15 with extension. The SIMPLE IRA plan itself must be established by October 1 of the calendar year if you are a new employer.
What if an employee does not contribute to a SIMPLE IRA?
If the employer uses the 3% match option, the employer is not required to contribute for non-contributing employees. However, if the employer uses the 2% non-elective option, the employer must contribute 2% for all eligible employees, even if they do not contribute. This is an important distinction when choosing the plan structure.
Official sources
- SIMPLE IRA plan details and rules: IRS SIMPLE IRA Plans.
- 2025 contribution limits: IRS Rev Proc 2024-40.
- SECURE 2.0 super catch-up for ages 60-63: IRS Notice 2024-80.
- Self-employed retirement plans: IRS Publication 560.
Reviewed by the CalculatorHub team, edited by James Graham, 13 June 2026. See our methodology. General information, not financial advice.