SIMPLE IRA
Timothy Lake was an Editorial Intern at Encyclopædia Britannica.
Doug is a Chartered Alternative Investment Analyst who spent more than 20 years as a derivatives market maker and asset manager before “reincarnating” as a financial media professional a decade ago.
Before joining Britannica, Doug spent nearly six years managing content marketing projects for a dozen clients, including The Ticker Tape, TD Ameritrade’s market news and financial education site for retail investors. He has been a CAIA charter holder since 2006, and also held a Series 3 license during his years as a derivatives specialist.
Doug previously served as Regional Director for the Chicago region of PRMIA, the Professional Risk Managers’ International Association, and he also served as editor of Intelligent Risk, PRMIA’s quarterly member newsletter. He holds a BS from the University of Illinois at Urbana-Champaign and an MBA from Illinois Institute of Technology, Stuart School of Business.
A SIMPLE IRA is a tax-deferred, employer-sponsored retirement savings plan designed for small businesses (usually with 100 or fewer employees) to provide a retirement plan to their employees. Employees with SIMPLE plans can contribute themselves, and their employers can contribute as well. The employer can choose to match up to 3% of employees’ contributions dollar for dollar, or make nonelective contributions of up to 2% of the employees’ income without the requirement that employees also contribute.
For employees, it’s important to note that if they make contributions to multiple employer-sponsored retirement accounts, including 401(k)s, the total contribution across all accounts is limited to $22,500 in 2023. Employee salary contributions are limited to $15,500, or $19,000 for those older than 50.
SIMPLE plan holders must take required minimum distributions (RMDs) starting at age 73. Like SEP IRAs, there are now Roth contributions available for SIMPLE IRAs thanks to the SECURE 2.0 Act.
To learn more about SIMPLE IRAs and other small-business retirement plans, here’s an overview.