SIMPLE IRA Calculator

A SIMPLE IRA (Savings Incentive Match Plan for Employees) is a retirement plan for small businesses with 100 or fewer employees. Employees contribute through payroll, and the employer must either match contributions up to 3% of pay or make a 2% nonelective contribution for everyone. It is cheaper and easier to run than a 401(k), which is why small employers favor it, though its contribution limits are lower (IRS: SIMPLE IRA plan).

In 2026 the employee deferral limit is $17,000, or $18,100 if your employer has 25 or fewer employees. Workers 50 and older add a catch-up: $4,000 at standard employers and $3,850 at the small-employer higher limit, with a $5,250 super catch-up at ages 60 to 63. On top of your deferral, your employer adds either a 3% match or a 2% nonelective contribution (IRS Notice 2025-67).

For the first two years after your first contribution to a SIMPLE IRA, two special rules apply. First, if you take an early withdrawal before age 59 1/2, the penalty is 25%, not the usual 10%. Second, you can only roll the money into another SIMPLE IRA, not into a 401(k) or Traditional IRA. After the two-year window, the normal 10% penalty and full rollover options apply. The clock starts from your very first contribution, not from when you leave the job (IRS: SIMPLE IRA withdrawal rules).

Every year the employer chooses one of two options. The 3% match is dollar-for-dollar on what you defer, up to 3% of your pay, so you only get the full match if you contribute at least 3% yourself. The 2% nonelective contribution goes to every eligible employee regardless of whether they contribute, but it is capped at 2% of pay. The match rewards savers; the 2% guarantees everyone something. The calculator above lets you model both.

A 401(k) has a much higher employee deferral limit, $24,500 in 2026 versus $17,000 for a SIMPLE IRA, plus larger catch-up contributions and the option of a Roth account and plan loans. A SIMPLE IRA is cheaper and simpler for the employer to run, with no annual Form 5500 and no nondiscrimination testing. Many small businesses start with a SIMPLE IRA and move to a 401(k) as they grow and employees want to save more. The calculator shows how much more you could defer under a 401(k) at your age.

Yes. Your SIMPLE IRA deferral does not use up your $7,500 Traditional or Roth IRA limit ($8,600 at 50 and older in 2026); they are separate. Being an active participant in a SIMPLE IRA does count as workplace plan coverage, which can phase out your Traditional IRA deduction at higher incomes, and you can still contribute to a Roth IRA if your income qualifies.

SECURE 2.0 now allows Roth SIMPLE IRA contributions, but only if your employer's plan offers the option, and adoption has been gradual. If your plan supports it, your salary deferrals can go in after-tax and grow tax-free. Employer match and nonelective contributions are pre-tax by default, though they can also be designated Roth if you elect it and pay tax on them. Check with your plan administrator to see whether the Roth option is available.