Annual contribution limits for SIMPLE IRAs in the years 2023 and 2024

A SIMPLE RETIREMENT ACCOUNT is a tax-favored investment vehicle frequently employed by self-employed individuals and small-scale employers in search of a hassle-free means to save for retirement.

Investments into a SIMPLE RETIREMENT ACCOUNT are tax-deductible in the year they are made, and both employers and workers can contribute. The contribution ceiling is adjusted to inflation and escalates over time.

For the majority of individuals, the annual contribution cap for a SIMPLE RETIREMENT ACCOUNT is $16,500 in 2025 (a rise from $16,000 in 2024). However, per the SECURE 2.0 Act, some employees are entitled to an automatic 10% increase in the elective deferral limit and can contribute up to $17,600.

Employees aged 50 and over can also make an additional $3,500 catch-up contribution in both 2024 and 2025, provided their plan allows it. This increases to $3,850 for employees entitled to the 10% automatic increase, and for employees aged 60 to 63, there's a new "super catch-up" contribution limit of $5,250.

If your company offers a SIMPLE RETIREMENT ACCOUNT, or you're considering using one, here are the key points you should be aware of.

Diving into it

Insights on a SIMPLE RETIREMENT ACCOUNT

Individual

SIMPLE RETIREMENT ACCOUNTS, or savings incentive match plans for employees, are predominantly utilized by self-employed workers and employees of small businesses. They allow you to set aside funds for retirement without compelling an employer to establish a more complicated employer-sponsored retirement plan such as a 401(k).

$16,500

Many brokerage firms offer SIMPLE RETIREMENT ACCOUNTS. Opening one is uncomplicated as long as you meet the requirements, including having fewer than 100 employees. Compliance and administrative duties associated with a SIMPLE RETIREMENT ACCOUNT are less burdensome than implementing a 401(k) plan.

$23,500

Rather than having specific administrative procedures, most financial institutions handle SIMPLE RETIREMENT ACCOUNTS in a similar fashion to how they manage personal IRAs or brokerage accounts. You'll need to finish some extra forms to meet requirements, but that's minimal. Employers only need to ensure that money is correctly deposited into SIMPLE RETIREMENT ACCOUNTS.

$7,000

Kinds of contributions

N/A

Types of contributions that can be made to a SIMPLE RETIREMENT ACCOUNT

There are two types of contributions that can be made to a SIMPLE RETIREMENT ACCOUNT:

Catch-Up Contributions

Salary reduction contributions: These are contributions employees make from their pay.
Employer contributions: Employers have the option of matching a portion of employee contributions or making non-elective contributions, which they must make regardless of how much employees invest.

$3,500 - $5,250

SIMPLE RETIREMENT ACCOUNTS have lower limits compared to what you'd find with a 401(k) plan or certain other retirement plan options.

$7,500 - $11,250

What is the SIMPLE RETIREMENT ACCOUNT contribution limit for 2025?

$8,000

There are two separate SIMPLE RETIREMENT ACCOUNT contribution limits.

N/A

Employee contribution limit

The maximum SIMPLE RETIREMENT ACCOUNT employee contribution limit is $16,500 in 2025 (an increase from $16,000 in 2024). Employees aged 50 or older are also eligible for additional catch-up contributions, provided their SIMPLE RETIREMENT ACCOUNT plan allows it. The standard catch-up contribution of $3,500 remains unchanged from 2024, however, some employees are eligible for catch-up contributions up to $3,850, and employees aged 60 to 63 are eligible for a larger super catch-up limit of $5,250.

Employer

Employees who contribute to any other employer plans with elective salary reductions are also subject to an aggregate limit of $23,500 in 2025 (up from $23,000 in 2024). In other words, if you have both a 401(k) and a SIMPLE RETIREMENT ACCOUNT, you can only contribute a maximum of $23,500 across both accounts not including catch-up contributions.

Matching contributions of up to 3% of any salary, or 2% elective contribution on up to $350,000 in income

Employer contribution limit

Total limit (including employee and employer contributions) is $70,000 not including catch-up contributions

Employers can either:

N/A

Match their employees' contributions dollar-for-dollar up to a maximum of 3% of each employee's salary without any limit.
Make a contribution of 2% of each employee's salary (using only the first of $350,000 of salary in 2025, up from $345,000 in 2024) regardless of whether the employee makes contributions or not.

$70,000

Employers who opt for matching contributions are allowed to reduce the match below 3%. However, it must be at least 1%, and they can reduce the match for no more than two out of five years.

If you're contributing to various retirement accounts, be aware of the regulations. For instance, your capacity to contribute to a conventional IRA is limited if you, or your spouse, are enrolled in a corporate retirement plan – such as a SIMPLE IRA – and your income surpasses a specific limit.

By evaluating all your retirement savings alternatives, you can pick the plans that enable you to save the most and profit from tax advantages that simplify and cheapen the process of creating your retirement savings.

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Additionally, managing your retirement finance effectively involves strategic planning and making informed decisions about your retirement savings. This might include considering the potential impact of inflation on your retirement income and adjusting your contributions accordingly.

Furthermore, as you approach retirement, it's essential to review your retirement account balance and consider whether you might need to supplement your retirement income with other sources, such as part-time work or selling assets. With careful planning and management of your retirement finances, you can help ensure a secure and comfortable retirement.