SIMPLE IRA Contribution Limit 2026
Current year
For 2026, the SIMPLE IRA Contribution Limit is $17,000 (Salary reduction limit) and +$4,000 (Catch-up limit, age 50 and over).
Effective 2026-01-01Source: Notice 2025-67 (IRS)Verified 2026-09-01
Compared with 2025
| Item | 2025 | 2026 | Change |
|---|---|---|---|
| Salary reduction limit | $16,500 | $17,000 | +$500 (+3.0%) |
| Catch-up limit, age 50 and over | +$3,500 | +$4,000 | +$500 (+14.3%) |
Who it applies to
The $17,000 is the participant's own figure. Notice 2025-67 states it as the limitation on salary reduction contributions under a SIMPLE retirement account and on elective contributions under a SIMPLE plan described in section 401(k), so it follows what an employee elects to defer. The same notice sets a separate limitation under section 408(p) for additional nonelective contributions for an employee, which is a different amount for a different kind of contribution. The $4,000 catch-up comes from section 414 and applies to individuals aged 50 or over in a plan described in section 401(k) or section 408(p), which is what makes it the SIMPLE catch-up rather than the general employer plan one. The notice also states a higher salary reduction limitation for certain of those accounts or plans, and a further catch-up figure for an older age band, each as its own amount.
What changed this year, and why
For 2026 the limitation that generally applies to salary reduction contributions under a SIMPLE retirement account, or to elective contributions under a SIMPLE plan described in section 401(k), is increased from $16,500 to $17,000. The catch-up limitation under section 414 that generally applies for individuals aged 50 or over in such a plan is increased from $3,500 to $4,000. Both figures moved for 2026, where for 2025 the catch-up had held at $3,500. Notice 2025-67 also raises a separate, higher salary reduction limitation for certain of those accounts or plans, stated as a figure of its own.
Common questions
- What is the 2026 SIMPLE IRA contribution limit?
- For 2026 the limitation that generally applies to salary reduction contributions under a SIMPLE retirement account is $17,000, increased from $16,500. The figure covers what a participant elects to defer. Notice 2025-67 sets employer nonelective contributions under a separate limitation in section 408(p), with its own amount, so the $17,000 is not a ceiling on everything reaching the account.
- How much did the SIMPLE IRA limit go up for 2026?
- Notice 2025-67 states the salary reduction limitation under section 408(p) as increased from $16,500 to $17,000, and the catch-up limitation under section 414 for individuals aged 50 or over in such a plan as increased from $3,500 to $4,000. Both moved for 2026, where for 2025 the catch-up had stayed at $3,500. The notice gives the endpoints after applying its rounding rules.
- What is the SIMPLE IRA catch-up contribution for 2026?
- It is $4,000, up from $3,500. Notice 2025-67 states this as the catch-up limitation under section 414 for a plan described in section 401(k) or section 408(p) that generally applies for individuals aged 50 or over. It is added to the $17,000 salary reduction limitation rather than replacing it, and it differs from the catch-up the notice sets for other employer plans.
- Does the SIMPLE limit also cover a SIMPLE plan under section 401(k)?
- Yes. Notice 2025-67 states one limitation under section 408(p) that generally applies both to salary reduction contributions under a SIMPLE retirement account and to elective contributions under a SIMPLE plan described in section 401(k). The $17,000 for 2026 is that single figure, so the notice does not give the two arrangements different deferral ceilings.
- Is there a higher SIMPLE IRA limit for some plans?
- Yes. Alongside the $17,000, Notice 2025-67 raises a higher limitation under section 408(p) for certain of those accounts or plans, published as its own amount for 2026. It is a separate figure rather than an adjustment to the $17,000, and the notice identifies it only by the provision it falls under, not by the conditions that put a plan into that group.
- Are there other SIMPLE IRA catch-up amounts besides the age 50 one?
- Yes. Notice 2025-67 states a further catch-up limitation under section 414 for individuals who attain age 60 through age 63 in 2026 in a plan described in section 401(k) or section 408(p), and another for certain accounts or plans in that group. Each is published as its own amount for 2026 and neither is the $4,000 figure that applies for individuals aged 50 or over.
- Do employer contributions count toward the $17,000 SIMPLE limit?
- The $17,000 is stated as the limitation on salary reduction contributions and elective contributions, which is what a participant elects to defer. Notice 2025-67 separately states a limitation under section 408(p) for additional nonelective contributions for an employee to a SIMPLE retirement account, with its own amount for 2026. The notice keeps the two as distinct limitations rather than one combined ceiling.
- Where does the 2026 SIMPLE IRA limit come from?
- Notice 2025-67, titled 2026 Amounts Relating to Retirement Plans and IRAs, as Adjusted for Changes in Cost-of-Living. Section 415 requires the Secretary of the Treasury to adjust these limitations annually for cost-of-living increases, and the SIMPLE amounts are among those the notice adjusts on that schedule, after the applicable rounding rules. The salary reduction figure comes from section 408(p) and the catch-up from section 414.
Every amount on this page is a published figure rather than yours. The SIMPLE IRA contribution planner takes the number you enter and works it out against them, showing which published figure it used.
Only employers with 100 or fewer employees
An employer can establish a SIMPLE IRA plan only if it had 100 or fewer employees who received $5,000 or more in compensation during the preceding calendar year. Every worker who was employed at any point during that year must be counted toward this headcount, even if they did not earn enough to become eligible for the plan themselves. Self-employed individuals who received earned income and leased employees are included in the count. An employer that grows beyond 100 eligible employees after adopting the plan may continue to maintain it for a grace period, but a business that starts above the threshold cannot use this vehicle in the first place. In addition, an employer that already sponsors another qualified retirement plan generally cannot set up a SIMPLE IRA plan, unless the other plan covers only collective bargaining employees. These two gatekeeping rules, the headcount ceiling and the ban on a second qualified plan, are the basic eligibility conditions that determine whether SIMPLE IRA is on the table at all.
Employee limit. You can set up a SIMPLE IRA plan only if you had 100 or fewer employees who received $5,000 or more in compensation from you for the preceding year.
Publication 560 (2025), Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) (IRS)
The $5,000 test that decides who must be let in
An employee is eligible to participate in a SIMPLE IRA plan if they received at least $5,000 in compensation during any 2 years preceding the current calendar year and are reasonably expected to receive at least $5,000 during the current year. This means the employer looks back at the 2 calendar years before the plan year starts. If the employee met the $5,000 threshold in either of those 2 prior years and is expected to reach it again in the current year, they must be allowed to join. The definition of employee includes self-employed individuals who received earned income. Employers may adopt less restrictive eligibility rules, such as eliminating the prior-year requirement entirely or lowering the dollar threshold, but they cannot impose stricter requirements. The $5,000 figure is the maximum the plan is allowed to demand, so it functions as the bright line that determines who must be included.
Any employee who received at least $5,000 in compensation during any 2 years preceding the current calendar year and is reasonably expected to re- ceive at least $5,000 during the current calendar year is eligible to participate.
Publication 560 (2025), Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) (IRS)
A new plan has to be in place by October 1
A new SIMPLE IRA plan can be made effective on any date from January 1 through October 1 of a year, provided the employer did not previously maintain a SIMPLE IRA plan. This gives a business with existing payroll almost nine months into the calendar year to adopt the plan. If the employer already had a SIMPLE IRA plan in a prior year and is setting up a new one, the effective date is restricted to January 1 of the current year. A new employer that comes into existence after October 1 gets a special exception and may establish the plan as soon as administratively feasible. The plan cannot have an effective date before the date it is actually adopted. For existing businesses that are adopting a SIMPLE IRA plan for the first time, the October 1 deadline is the hard outer boundary. Once that date passes, an employer that missed the window must wait until the next January 1 to bring the plan into effect.
You can set up a SIMPLE IRA plan effective on any date from Jan- uary 1 through October 1 of a year, provided you didn't previously maintain a SIMPLE IRA plan.
Publication 560 (2025), Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) (IRS)
What your employer has to put in
For a SIMPLE IRA in 2026, an employer that chooses the matching option must match each employee's salary reduction contributions dollar for dollar, up to 3% of that employee's compensation for the year. If an employee elects to defer part of their salary but the deferral is less than 3% of their pay, the employer matches only the smaller amount the employee actually deferred. If the employee defers more than 3%, the employer's match is capped at 3% of compensation. Only employees who actually elect to make salary reduction contributions receive the employer match; those who do not contribute receive nothing under this formula. The employer may avoid this matching obligation entirely by choosing instead to make nonelective contributions for all eligible employees, whether or not they defer, but the matching alternative described here is the standard requirement for SIMPLE IRA plans.
Employer matching contributions. You are generally required to match each employee's salary reduction con- tribution(s) on a dollar-for-dollar basis up to 3% of the em- ployee's compensation, where only employees who have elected to make contributions will receive an employer matching contribution.
Publication 560 (2025), Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) (IRS)
The catch-up is not automatic: age 50 by year end, and the plan must allow it
A plan can permit participants who are age 50 or over at the end of the calendar year to make catch-up contributions in addition to elective deferrals and SIMPLE plan salary reduction contributions. Two conditions must be met: the participant must be age 50 or over by December 31 of the year of the contribution, and the plan itself must allow catch-up contributions. The catch-up is not automatic; the plan document must expressly permit these additional contributions. For 2026, the SIMPLE IRA catch-up limit is $4,000, which is separate from and in addition to the regular salary reduction limit of $17,000. A participant who is age 50 or over may therefore defer the full salary reduction limit plus the additional catch-up amount if the plan allows catch-ups. The age test looks to the end of the calendar year, so a participant who turns 50 on December 31 still qualifies for the full catch-up amount for that year. Employers administering SIMPLE IRA plans should confirm that their plan document includes the catch-up provision and that payroll systems are set up to track each participant's age by year end.
A plan can permit participants who are age 50 or over at the end of the calendar year to make catch-up contributions in addition to elective deferrals and SIMPLE plan salary re- duction contributions.
Publication 560 (2025), Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) (IRS)
Withdrawing in the first two years costs 25%
Early withdrawals from a SIMPLE IRA carry a special penalty during the participant's first years in the plan. However, the additional tax is increased to 25% if funds are withdrawn within 2 years of beginning participation in the SIMPLE IRA plan. This heightened penalty applies only during the 2-year period that begins when the participant first joins the plan, not when the employer first establishes the plan. After the 2-year period has passed, the early withdrawal penalty drops back to the standard rate that applies to traditional IRA distributions. The 25% rate is imposed on top of ordinary income tax owed on the distribution, making early withdrawal during this window substantially more costly than in later years. The rule is designed to discourage participants from using the SIMPLE IRA as a short-term savings vehicle and then cashing out immediately. Participants should be aware that any distribution taken before the 2-year anniversary of their plan participation will face this elevated penalty, and payroll and plan administrators should clearly communicate this timing rule to newly eligible employees.
However, the additional tax is increased to 25% if funds are withdrawn within 2 years of beginning partici- pation.
Publication 560 (2025), Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
Notice 2025-67 (IRS)
- Salary reduction limit
The limitation under section 408(p)(2)(E)(i)(III) that generally applies to salary reduction contributions under a SIMPLE retirement account or elective contributions under a SIMPLE 401(k) plan is increased from $16,500 to $17,000.
- Catch-up limit, age 50 and over
The limitation under section 414(v)(2)(B)(ii) for catch-up contributions to an applicable employer plan described in section 401(k)(11) or section 408(p) that generally applies for individuals aged 50 or over is increased from $3,500 to $4,000.
By year
Every published year
11 years on record, 2026 back to 2016. Each year links to its own page, its own document and its own verification date.