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Savings Incentive Match Plan For Employees (SIMPLE) IRA

If you're self-employed or a small-business owner, a "savings incentive match plan for employees" IRA is simple way for you and your employees to save for retirement.

Unlike a SEP IRA, both employees and employers can contribute to a SIMPLE IRA. Employees elect to make pre-tax contributions1 from their salary, and the employer matches it. Or, employers can make contributions on employees' behalf.

As the name implies, a SIMPLE IRA is easier to set up and administer than other employer-sponsored retirement plans such as a 401(k).

How it works

  • Employees defer pre-tax income into the plan, up to $16,000, or $19,500 if they're 50 or older.
  • An employer can choose to make either matching contributions, from 1% to 3% of his or her salary, or;
  • Make non-elective contributions of 2% of the employee's salary, no matter what or if the employee contributes.
  • Contributions not made by the IRA deadline may incur fees or require filing an amended tax return.
  • Unlike some other employer-sponsored plans, eligible employees cannot opt out of participating.

How to qualify

  • Be a business, including a sole proprietor, with fewer than 100 employees.
  • Be an employee who has earned at least $5,000 in pay for any two previous years and at least $5,000 in the current year.


Would you like to learn more?

Set up a meeting with a financial advisor.

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  1. This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.