A Savings Incentive Match Plan for Employees (SIMPLE) IRA is an employer-sponsored retirement plan solely offered to employees through their employer. This type of account is specifically made for small businesses with less than 100 employees. Employee participation can depend on their income in the past two years.
Small businesses widely utilize this type of retirement account because its setup and management costs are low. However, the IRS sets distinct rules for this account type that the account holder must follow to stay qualified.
Understanding the Basics
A major appeal of a SIMPLE IRA for small businesses is the minimal paperwork, requiring only the initial plan document and annual disclosures to employees. The employer can establish a plan with a dedicated financial institution.
Overall, startup and maintenance costs are lower than alternative IRA options. Employers can also take advantage of a tax deduction for their contributions through employer match.
Small businesses with 100 or fewer employees are eligible for a SIMPLE IRA. Self-employed or sole proprietors are also eligible. Employers can have a say in the restrictive participation requirements and choose to deny participation to employees with union benefits.
SIMPLE IRA Contributions (2026)
SIMPLE IRA employee contribution limits are adjusted periodically by the IRS. Employers must stay up to date on annual limits, including employee deferrals, catch-up contributions, and employer matching requirements.
For 2026 , the SIMPLE IRA contribution limits are:
- Up to $17,000 in employee salary deferrals
- Additional $3,500 catch-up contribution for individuals age 50 and older
These limits apply to employee elective deferrals only and do not include employer contributions.
Catch-Up SIMPLE IRA Contributions
If an employee (or business owner) is age 50 or older, they are eligible to make catch-up contributions.
For 2026:
- Individuals age 50+ may contribute an additional $3,500
- Total possible employee contribution with catch-up: $20,500
Catch-up contributions are designed to help individuals who may have delayed saving for retirement or need to accelerate contributions later in their working years.
Employer Match Contributions
SIMPLE IRAs require employer contributions. Employers must choose one of the following methods:
Option 1: Matching Contribution
- Match employee contributions dollar-for-dollar up to 3% of compensation
- The match may be reduced to as low as 1% , but only in two out of five years
Option 2: Non-Elective Contribution
- Contribute 2% of compensation to each eligible employee
- Contributions must be made for all eligible employees, even if they do not contribute themselves
For 2026, the compensation limit used for calculating employer contributions is $360,000.
Additional SIMPLE IRA Rules
- SIMPLE IRAs do not allow additional “super” catch-up contributions like Solo 401(k)s.
- Contributions are generally made through payroll.
- Employers cannot maintain another retirement plan while offering a SIMPLE IRA.
Accuplan offers other business retirement account solutions that can help small business owners maximize retirement savings while remaining compliant with IRS rules.
2026 SIMPLE IRA Contribution Quick Reference
Compensation cap: $360,000
Employee deferral limit: $17,000
Catch-up contribution (50+): $3,500
Employer match: Up to 3% of compensation
Non-elective option: 2% of compensation
Rules and Taxes
According to IRS rules and laws, the business operating this type of IRA can employ up to 100 employees.
All contributed retirement funds grow at a tax-deferred rate. However, upon retirement, distributions are taxed as income and are subject to a percentage being withdrawn by the IRS.
How to Establish a SIMPLE IRA Plan With Accuplan
Accuplan Benefits Services can help you set up a self-directed SIMPLE IRA and invest in tangible assets. Follow these steps to get started:
- Open an Accuplan account: To set up your account, fill out an online form. The form will ask for your basic company information, security information and identity verification to keep your account safe.
- Pick the type of SIMPLE IRA plan: You will then need to file an IRS Form 5305-SIMPLE and pick the type of plan you need. This form will ensure that all your business’s contributions toward employee IRAs will be deposited at your designated financial institution.
- Provide information to employees: After the initial plan is set up, you will need to give the SIMPLE IRA plan information to the eligible employees. From here, they must prepare their information for their individual IRAs.
- Set up separate SIMPLE IRAs: Each employee will need their own SIMPLE IRAs. You will need to use Form 5305-S or Form 5305-SA — Accuplan can help you determine which you need.
Contact Our Experts for More Information
You can help your small business employees take charge of their retirement with us. Accuplan can assist you with setting up a SIMPLE IRA plan for each of your employees. Contact us for more information or to learn more about the individual self-directed accounts that Accuplan offers.
Frequently Asked Questions
How Much Money Do Employers Need to Contribute?
Employers can choose a flat 2% of an employee salary for each eligible member, even if the dollar-for-dollar match is capped at 3%. The cap may also be reduced to 1% for two chosen years within five years.
Are There Employee Contribution Limits?
Employee contribution limits vary depending on the contribution year and eligible compensation. For the most current limits, contact Accuplan.
Who Can Participate in a SIMPLE IRA?
Employees who received at least $5,000 in two calendar years and will earn at least $5,000 in the current year can participate in a SIMPLE IRA plan.
How Much Will a SIMPLE IRA Cost With Accuplan?
Accuplan’s fees:
Annual Fee: $349.95
Account Establishment: Fee $50
What Are the Employee Advantages of a SIMPLE IRA?
Through a SIMPLE IRA, employees can benefit from interest, employer contributions, dividends and investment earnings. They can also grow their IRA to a tax-deferred plan until withdrawn at retirement.
Are Contributions Fully Vested?
Yes — contributions from employees and employers are entirely and immediately vested.