However, there are some new rules for SIMPLE IRAs under the Secure Act 2.0:
- For employers with 25 or fewer workers, employees can contribute up to $17,600 in both 2024 and 2025. Workers 50 and older are eligible to make catch-up contributions of up to $3,850, bringing their maximum contribution to $21,450.
- Employers with 26 to 100 workers are eligible for the higher limits listed above -- but only if they implement the higher employer contribution rates of a flat 3% of workers' salaries or a dollar-for-dollar 4% match.
- Beginning in 2025, workers ages 60-63 can make catch-up contributions of 150% of the standard amount, bringing the maximum SIMPLE IRA catch-up contribution to $5,250.
Contributions are made through payroll deductions and aren’t subject to income tax. They are, however, still subject to FICA and unemployment taxes.
Employee SIMPLE IRA contributions do not preclude contributions to other employer-sponsored retirement plans an employee may have. Contributing to a SIMPLE IRA doesn’t prevent employees from opening their own IRAs and contributing. For those who rely on a backdoor Roth IRA, however, the SIMPLE IRA account may cause problems.