SIMPLE IRA

A SIMPLE IRA (Savings Incentive Match Plan for Employees Individual Retirement Account) is an employer-sponsored retirement plan designed for small businesses with 100 or fewer employees. Both employer and employee can make contributions: employees defer part of their salary into the plan, while employers must match employee contributions up to 3% of compensation or make a fixed contribution of 2% for all eligible employees, regardless of whether they contribute themselves. Contributions are made on a pre-tax basis (with an option for Roth available starting in 2026), and investments grow tax-deferred until withdrawal in retirement. SIMPLE IRAs are easy and low-cost to set up, require no annual IRS filings from the employer, and contributions are immediately 100% vested, but they have lower contribution limits and less flexibility than other retirement plans like 401(k)s.