ASavings Incentive Match Plan for Employees Individual Retirement Account, commonly known by the abbreviation "SIMPLE IRA", is a type of tax-deferred employer-provided retirement plan in the United States that allows employees to set aside money and invest it to grow for retirement. Specifically, it is a type of Individual Retirement Account (IRA) that is set up as an employer-provided plan. It is an employer sponsored plan, like better-known plans such as the 401(k) and 403(b) (Tax Sheltered Annuity plans), but offers simpler and less costly administration rules, as it is subject to ERISA and its associated regulations. Like a 401(k) plan, the SIMPLE IRA can be funded with pre-tax salary contributions, but those contributions are still subject to Social Security, Medicare, and Federal Unemployment Tax Act taxes.[1] Contribution limits for SIMPLE plans are lower than for most other types of employer-provided retirement plans as compared to conventional defined contribution plans like Section 402(g), 401(k), 401(a), and 403(b) plans.
If a participant, who is not yet 59½ years old, wishes to take a distribution and it has been less than two years since their first contribution into the plan, they could be required to pay a penalty of up to 25% (10% if more than two years) to the Internal Revenue Service. This two-year rule applies to all distributions, including rollovers from the SIMPLE IRA. Any amount withdrawn and not rolled over, regardless of age, is also subject to ordinary income tax for the year in which the distribution is made.
| Year | Under Age 50 | Age 50 or Older |
|---|---|---|
| 2005 | $10,000 | $12,000 |
| 2006 | $10,000 | $12,500 |
| 2007 | $10,500 | $13,000 |
| 2008 | $10,500 | $13,000 |
| 2009 | $11,500 | $14,000 |
| 2010 | $11,500 | $14,000 |
| 2011 | $11,500 | $14,000 |
| 2012 | $11,500 | $14,000 |
| 2013 | $12,000 | $14,500 |
| 2014 | $12,000 | $14,500 |
| 2015 | $12,500 | $15,500 |
| 2016 | $12,500[1] | $15,500[1] |
| 2017 | $12,500[1] | $15,500[1] |
| 2018 | $12,500 | $15,500 |
| 2019 | $13,000 | $16,000 |
| 2020 | $13,500 | $16,500 |
| 2021 | $13,500 | $16,500 |
| 2022 | $14,000 | $17,000 |
| 2023 | $15,500 | $19,000 |
| 2024 | $16,000 | $19,500 |
