A Simple IRA is a retirement program for self-employed individuals and small businesses with 100 or fewer employees. Eligible employees can fund these accounts with salary deferrals and employers may make additional contributions. A Simple IRA provides a way to contribute to a retirement account on a regular basis.
Simple IRA Contribution Limits for 2025
An employee may contribute up to $16,500 if under the age of 50 and $19,000 if age 50 or older.
An employer is required to contribute for the employee. This can be either a dollar-for-dollar matches up to 3% of an employee’s salary or a flat 2% of an employees pay. Employers are required to contribute whether the employee contributes to the Simple IRA. The employers matching contributions are tax deductible as a business expense. Please consult with a tax advisor for a Simple IRA plan.
Benefits of a Simple IRA
Investment growth will be tax-deferred — Investment will grow tax deferred with compound interest until retirement.
Investment Choices — Allows you many investment choices enabling you to meet your long-term financial goals and invest the money based upon your risk tolerance.
Instant Vesting — Employer contributions are 100% vested to the employee immediately and can go with the employee whenever they leave the company.
Schedule a Meeting to Learn About Simple IRA Accounts
If you are looking investment options for your small business, contact Safe Harbor to learn more. We offer a complimentary consultation to review your existing retirement plans and can provide guidance on the right IRA Account solution that will provide the money you need to live comfortably in your golden years. Contact us here or call at 614-760-0670 to schedule your initial consultation or to learn more about a Simple IRA accounts.
Simple IRA FAQs
Who qualifies for a SIMPLE IRA?
Small businesses with up to 100 employees who earned at least a certain amount during the prior year can set up a SIMPLE IRA. Self-employed workers with no or few employees also commonly use it.
How do contributions work?
Employees can elect to contribute a portion of their wages each pay period (elective deferral). Employers contribute either by matching a percentage of employee contributions or by making a fixed contribution for all eligible employees.
What are the main tax benefits?
Employee contributions reduce taxable income in the year of contribution. Employer contributions are a business deduction. Earnings grow tax-deferred until withdrawal.
Can employees contribute?
Yes — employees choose how much to defer (up to IRS limits). This makes SIMPLE IRAs a good choice when employees want to save regularly for retirement.
Is a SIMPLE IRA easy to set up and maintain?
Yes. SIMPLE IRAs have modest paperwork and do not require the complex compliance or annual filings that some larger retirement plans demand. Safe Harbor can help your business get started with a Simple IRA.
What are some limitations or restrictions?
SIMPLE IRAs generally have lower contribution limits than plans like a 401(k). Withdrawals before retirement age may incur penalties. Also, employer contributions must follow the chosen match or fixed schedule for all eligible employees.
How does Safe Harbor Wealth Advisors help?
Safe Harbor guides you through plan setup, employer and employee contribution options, ongoing compliance, and investment selection — helping simplify retirement planning for business owners and employees alike.