SIMPLE IRA
retirementAlso known as: SIMPLE, SIMPLE IRA, Savings Incentive Match Plan
Updated · Written and reviewed by Konstantin Iakovlev
Detailed explanation
SIMPLE IRA is the "lighter" version of 401(k) for small businesses — easier to set up, fewer compliance requirements. Employer contributions: either 3% match (dollar-for-dollar, up to 3% of compensation) or 2% non-elective (regardless of employee participation). Employees can elect to defer $17,500 in 2026 ($21,000 at 50+, $25,500 at 60-63 under SECURE 2.0). Funds taxed as ordinary income at withdrawal. Withdrawals before age 59½ subject to 10% penalty (25% if within first 2 years of participation — uniquely steep). Most small businesses now prefer Solo 401(k) for higher limits, but SIMPLE remains useful for businesses with 5-30 employees.
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