The Savings Incentive Match Plan for Employees (SIMPLE) IRA is a tax-advantaged retirement plan designed specifically for small businesses with 100 or fewer employees. It offers an easy and cost-effective way for employers to help their teams save for retirement—without the administrative burden of a traditional 401(k) plan.
For both business owners and employees, the SIMPLE IRA strikes a balance between accessibility and meaningful retirement savings potential. While the contribution limits are lower than other qualified plans, the setup and maintenance are, true to its name, simple.
Contributions & Eligibility
In 2025, employees can contribute up to $16,500 to a SIMPLE IRA, with an additional $3,500 catch-up contribution allowed for those age 50 or older. These contributions are made on a pre-tax basis, reducing taxable income in the year they’re made. All employees who earned at least $5,000 in any two preceding years—and are expected to earn at least $5,000 in the current year—must be allowed to participate in the plan.
Employers are required to make either:
- A dollar-for-dollar match of up to 3% of compensation (only for employees who contribute),
or - A 2% nonelective contribution for all eligible employees, regardless of whether they contribute.
This structure keeps costs predictable and encourages participation, while giving small employers a straightforward way to support employee retirement readiness.
