SIMPLE IRA Contribution Limits for 2025: What You Can Save

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If you’re a small business owner or employee looking for a simple, tax-advantaged way to save for retirement, a SIMPLE IRA might be your best option. The IRS has confirmed that SIMPLE IRA contribution limits for 2025 allow you to save more — up to $16,000, or $19,500 if you’re 50 or older.

This guide breaks down the 2025 limits, employer match rules, deadlines and how SIMPLE IRAs compare to 401(k)s and SEP IRAs, so you can make the most of your retirement dollars.

What Is a SIMPLE IRA?

A Savings Incentive Match Plan for Employees (SIMPLE) IRA is designed for small businesses with 100 or fewer employees. It combines the flexibility of a traditional IRA with the convenience of payroll-deducted savings similar to a 401(k).

With a SIMPLE IRA:

• Both you and your employer contribute.
• Contributions are tax-deductible and grow tax-deferred.
• The account is easy to set up and maintain, with minimal paperwork.

According to the IRS, more than 2.3 million small employers use SIMPLE or SEP IRA plans to provide retirement benefits to workers — making them one of the most popular small-business savings vehicles in the U.S.

SIMPLE IRA Contribution Limits for 2025

Here’s what you can contribute in 2025 under the latest IRS rules:

Key stat: The 2025 limit increased from $15,500 in 2024 to $16,000, giving savers 3% more room to grow their nest egg tax-deferred.

Contribution Deadlines

• Employee deferrals: Must be made by Dec. 31, 2025.
• Employer contributions: Can be made until the business’s tax-filing deadline, including extensions.

Example: How Much You Could Save

If you earn $80,000 a year:

• Employee deferral: $16,000
• Employer match (3%): $2,400
• Total (under 50): $18,400
• Total (50+): $21,900

That’s potentially 27% of your annual income going directly toward retirement savings.

Employer Contributions: Match vs. Nonelective

A key feature of SIMPLE IRAs is that employers are required to contribute, but they can choose how.

1. 3% Dollar-for-Dollar Match

• Employer matches what you contribute, up to 3% of your pay.
• You must contribute to receive the match.
• Encourages consistent saving habits.

2. 2% Nonelective Contribution

• Employer contributes 2% of pay for all eligible employees, whether they contribute or not.
• Great for teams with varying income or participation.

IRS data shows nearly 60% of SIMPLE plans use the 3% matching method, while smaller firms often prefer the flat 2% contribution for simplicity. Employers can’t switch between the two mid-year, and all contributions are tax-deductible business expenses.

SIMPLE IRA Rules for the Self-Employed

If you’re self-employed, you can act as both employer and employee — doubling your savings potential.

• Employee contribution: Up to $16,000 (+ $3,500 catch-up if 50+).
• Employer contribution: Up to 3% of net earnings (after deducting half your self-employment tax).

Be sure to calculate based on net self-employment income, not gross revenue, to stay within IRS limits.

According to the U.S. Small Business Administration, more than 46% of small business owners don’t yet have a retirement plan — meaning establishing a SIMPLE IRA can give you a major head start.

SIMPLE IRA vs. 401(k) vs. SEP IRA: 2025 Comparison

When a SIMPLE IRA Makes Sense

Choose a SIMPLE IRA if:

• You run a small business and want low costs and no annual filings.
• You prefer mandatory employer contributions that help all employees save.
• You don’t need the higher limits or administrative overhead of a 401(k).

Fidelity reports that the average small business 401(k) costs 2-3 times more to administer than a SIMPLE IRA — yet yields similar participation rates for firms with under 50 employees.

Contribution Deadlines and Tax Tips

Key Dates

• Employees: Must fund deferrals by Dec. 31.
• Employers: Have until their tax-filing deadline (plus extensions).

Tax Benefits

• Employer contributions are deductible business expenses.
• Employee contributions reduce taxable income today while earnings grow tax-deferred.
• Contributions are reported on IRS Form 5498, issued by your plan custodian.

Can You Contribute to Multiple Retirement Plans?

Yes, but there are limits. You can contribute to both a SIMPLE IRA and a Roth IRA if you meet income requirements.

However, if you participate in multiple employer plans (like a SIMPLE and a 401(k)), your combined employee deferrals can’t exceed $23,000 in 2025 across all plans.

Final Take to GO: Make the Most of SIMPLE IRA Contribution Limits

A SIMPLE IRA offers one of the easiest ways for small business owners and employees to save for retirement with low costs, built-in employer contributions and valuable tax breaks.

To recap:

• Employee limit (2025): $16,000
• Catch-up (50+): $3,500
• Employer contribution: 2-3% of pay
• Deadline: Dec. 31 for employees; tax-filing deadline for employers

If you’re self-employed or managing a small team, review your contribution plan now to make sure you’re maxing out these limits and capturing every available match.

Next steps:

• Use the GOBankingRates Retirement Calculator to estimate future savings.
• Compare SEP IRAs and Roth IRA contribution limits to see which plan fits your goals best.

Information is accurate as of Oct. 8, 2025.

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