What is the SIMPLE IRA contribution limit for 2026?

The 2026 SIMPLE IRA employee elective deferral limit is $17,000. Age 50+ catch-up is $4,000 (total $21,000); ages 60-63 catch-up is $5,250 (total $22,250). Employers must also contribute: either a dollar-for-dollar match up to 3% of compensation, or a 2% nonelective contribution for all eligible employees. Source: IRS Rev. Proc. 2024-40.

What is the SIMPLE IRA 2-year rule?

For the first two years from first participation, SIMPLE IRA funds can only be rolled to another SIMPLE IRA without triggering taxes. Rolling to a Traditional IRA or 401(k) within the 2-year period is a taxable distribution subject to a 25% early withdrawal penalty (not the standard 10%). After two years, SIMPLE IRA funds may roll to a Traditional IRA, 401(k), 403(b), 457(b), or SEP IRA. Source: IRC Section 408(d)(3)(G).

Who can establish a SIMPLE IRA?

Employers with 100 or fewer employees (who received at least $5,000 in the prior year) may establish a SIMPLE IRA. The employer cannot maintain another qualified plan in the same year (limited exceptions for collective bargaining). The plan must be established by October 1. Eligible employees are those with at least $5,000 in compensation in any two prior years and expected $5,000+ in the current year. Source: IRC Section 408(p).

Direct Answer

A SIMPLE IRA (Savings Incentive Match Plan for Employees IRA, IRC Section 408(p)) is a retirement savings plan for employers with 100 or fewer employees. The 2026 employee elective deferral limit is $17,000; age 50+ catch-up is $4,000; ages 60-63 catch-up is $5,250. Employers must make mandatory contributions (3% match or 2% nonelective). SIMPLE IRA funds are locked out of non-SIMPLE rollovers for two years from first participation.

SIMPLE IRA Profile: 2026 Contribution Limits and Employer Rules

By Swoopr Editorial Team · Published September 8, 2026

This profile cites IRS primary sources. It does not provide personalized tax or business advice. SIMPLE IRA rules have strict eligibility requirements; consult a tax advisor before establishing or participating in one.

2026 Contribution Limits

Category	2026 Limit
Employee elective deferral	$17,000
Age 50+ catch-up (standard)	$4,000 additional (total $21,000)
Ages 60-63 higher catch-up (SECURE 2.0)	$5,250 additional (total $22,250)
Employer match (dollar-for-dollar)	Up to 3% of compensation
Employer nonelective alternative	2% of compensation for all eligible employees

SIMPLE IRA contribution limits are lower than 401(k)/403(b) limits because the employer match is mandatory, not optional. Source: IRS Rev. Proc. 2024-40; IRC Section 408(p).

The 2-Year Rule

SIMPLE IRA participants face a special restriction during the first two years of participation: funds may only be rolled over to another SIMPLE IRA tax-free. Rolling to a Traditional IRA, 401(k), or any non-SIMPLE plan during the 2-year period is treated as a taxable distribution (plus a 25% early distribution penalty if under age 59½, compared to the normal 10% penalty).

After the 2-year period ends, SIMPLE IRA funds may be rolled over to:

Another SIMPLE IRA
A Traditional IRA
A 401(k) or 403(b) plan (if the receiving plan accepts SIMPLE rollovers)
A governmental 457(b) plan
A SEP IRA

SIMPLE IRA funds may NOT be rolled to a Roth IRA directly without first going through a Traditional IRA (converting there to Roth would trigger ordinary income tax on the converted amount).

Frequently Asked Questions

What is the SIMPLE IRA contribution limit for 2026?: The 2026 SIMPLE IRA employee elective deferral limit is $17,000. Age 50+ catch-up is $4,000 (total $21,000); ages 60-63 catch-up is $5,250 (total $22,250). Employers must also contribute: either a dollar-for-dollar match up to 3% of compensation, or a 2% nonelective contribution for all eligible employees. Source: IRS Rev. Proc. 2024-40.
What is the SIMPLE IRA 2-year rule?: For the first two years from first participation, SIMPLE IRA funds can only be rolled to another SIMPLE IRA without triggering taxes. Rolling to a Traditional IRA or 401(k) within the 2-year period is a taxable distribution subject to a 25% early withdrawal penalty (not the standard 10%). After two years, SIMPLE IRA funds may roll to a Traditional IRA, 401(k), 403(b), 457(b), or SEP IRA. Source: IRC Section 408(d)(3)(G).
Who can establish a SIMPLE IRA?: Employers with 100 or fewer employees (who received at least $5,000 in the prior year) may establish a SIMPLE IRA. The employer cannot maintain another qualified plan in the same year (limited exceptions for collective bargaining). The plan must be established by October 1. Eligible employees are those with at least $5,000 in compensation in any two prior years and expected $5,000+ in the current year. Source: IRC Section 408(p).

References

Swoopr Editorial Team

The Swoopr Editorial Team produces sourced investment education content for independent investors. This profile cites IRS primary sources verified as of September 2026. See our editorial policy and corrections policy.