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SIMPLE IRA

SIMPLE IRA Contribution Calculator

The SIMPLE IRA is the plan an employer with staff reaches for, and freelancers ask about it because the name sounds like less paperwork. Two things are worth knowing before you open one: its $17,000 deferral sits inside the same $24,500 ceiling as a 401(k) deferral — they are not separate allowances — and for a one-person business it allows less than a solo 401(k) at every income. This page shows both, with the figures.

Prepared for the 2026 tax year.

Where it does win. A SEP has no deferral and no catch-up at any age, so once you are 50 or over a SIMPLE can put in more than a SEP — $23,230 against $14,870 on $80,000 of profit.

Schedule C line 31. A self-employed person is both the employee and the employer here, so one profit feeds both halves.
The SIMPLE catch-up is smaller than the 401(k) one — $4,000 against $8,000 — because they are different provisions.
A plan must choose one. It cannot do both, and an employer cannot take the 2% and still skip the matching requirement by choice alone.
Anything deferred at a job. The combined salary reduction limit across all plans is $24,500, so this reduces the $17,000 that fits here.

Enter your profit, your age and which employer contribution your plan makes. The page gives the total, split into the salary reduction, the catch-up and the employer part — and shows how it compares with the other two plans.

Maximum SIMPLE contribution $0
Salary reduction $0
Catch-up $0
Employer contribution $0
Salary reduction room left $0 Out of the $24,500 combined ceiling, minus anything already deferred into another plan.
Against the other plans, same profit —
SEP IRA $0
Solo 401(k) $0

See the three plans side by side. The SEP vs Solo 401(k) Calculator runs the same comparison on your own figures, and names the two cases where the larger plan is the wrong one.

Paying for health cover from the same profit? The Self-Employed Health Insurance Calculator works out the premium deduction, which comes off the profit before any of these contributions are measured.

Where these figures come from

Salary reduction
$17,000 ·
Catch-up
$4,000 at 50+ · $5,250 at 60 to 63 ·
Combined deferral ceiling
$24,500 across all employer plans ·
Employer contribution
Dollar-for-dollar match up to 3% of compensation, or 2% nonelective — IRC §408(p)(2)(A)(iii) and §408(p)(2)(B)
Compensation limit
$360,000 ·
Verified
4 October 2026
How this is worked out

A SIMPLE has two halves, and they are calculated on different things — which is why a self-employed person has to work out both from the same profit.

Salary reduction
Smaller of $17,000, or your compensation, or what the $24,500 combined ceiling leaves
IRC §408(p)(2)(A)(ii) · IRS retirement topics, SIMPLE limits
The $17,000 is a sub-limit, not a separate allowance. The IRS states the combined salary reduction limit across all employer plans is $24,500 for 2026. A deferral already made at a job reduces what fits here.
Employer match
Dollar for dollar up to 3% of compensation
IRC §408(p)(2)(A)(iii)
The statute sets 3% as the applicable percentage, allows the employer to elect as little as 1%, and forbids that election in more than two years out of five.
Or the 2% nonelective
2% of compensation, whether or not the employee defers
IRC §408(p)(2)(B)
The employer chooses one, not both. Electing the 2% is what satisfies the matching requirement in place of it — so a plan that pays 2% pays no match, and vice versa.
Compensation, for a self-employed person
Net profit − one-half of self-employment tax
Pub. 560 (2025), steps 1 to 3

The formulas are shown as the authority defines them, in its own terms — the arithmetic is not copyrightable and the rates are public-domain US government material. What these lines cannot tell you is where your figures came from; that is what the table above is for.

Where a SIMPLE sits for a one-person business

On $80,000 of profit the three plans allow roughly:

Solo 401(k) $39,370 · SIMPLE $23,230 (at 50 or over) · SEP $14,870.

The order never changes at any income we tested, and the reason is structural. A solo 401(k) takes a $24,500 deferral; a SIMPLE takes $17,000; a SEP takes none at all. Everything else follows from that one difference, because a deferral is not measured against the 25% of compensation that limits the employer side.

So when is a SIMPLE the right answer? Above the SEP, once you are 50 or over — a SEP has no catch-up at any age, so the SIMPLE's $4,000 is the whole difference there. And in the situation the plan was written for: an employer with staff, where the question is not how much the owner can put away but what the plan costs to administer. A SIMPLE requires no annual filing and no discrimination testing.

The ceiling people miss

The $17,000 figure is widely quoted as if it were a separate allowance. It is not. The IRS states that an employee who participates in any other employer plan has a total salary reduction limit of $24,500 across all of them. Deferring into a SIMPLE does not leave a 401(k) deferral untouched elsewhere, and the reverse is also true: a deferral already made at a job eats into what fits in the SIMPLE.

Frequently asked questions

How much can I contribute to a SIMPLE IRA in 2026?

$17,000 of salary reduction, plus $4,000 if you are 50 or over ($5,250 at 60 to 63), plus an employer contribution of either a 3% match or 2% nonelective. The employer part is the one people forget: in a SIMPLE it is required, not optional — the plan must do one of the two.

Can I have a SIMPLE and a 401(k) deferral in the same year?

You can participate in both, but not at full value in each. The salary reduction limit is $24,500 across all plans for 2026. The $17,000 SIMPLE figure is a sub-limit inside that ceiling. If you have already deferred $24,500 at a job, nothing further fits in the SIMPLE; if you deferred $10,000 elsewhere, up to $14,500 remains, which is below the SIMPLE's own $17,000 cap.

Is a SIMPLE better than a SEP for one person?

Below about $125,000 of profit, yes — above it, no. A SEP has no employee deferral and no catch-up at any age; every dollar of it is an employer contribution tested against 25% of compensation. A SIMPLE can place $17,000 of deferral before that test applies, and at 50 or over it adds a $4,000 catch-up a SEP can never match. That makes the SIMPLE larger on a modest profit. But the SIMPLE's deferral is capped while a SEP is a flat percentage that keeps growing, so the two cross at roughly $125,000 — above that the SEP pulls ahead and stays ahead.

Is a SIMPLE better than a solo 401(k)?

No, not on the contribution figure — at any level we tested. The 401(k) allows a $24,500 deferral rather than $17,000, a larger catch-up, and the employer part is measured the same way in both. The SIMPLE's advantages are elsewhere: no annual filing, no discrimination testing, and a simpler establishment. If you have staff and want a plan that is cheap to run, that is the case for it.

Which employer contribution is better, the 3% match or the 2% nonelective?

For a one-person business deferring the maximum, the 2% pays more — and that surprises almost everyone. The two are measured on different bases: the match is 3% of what you defer, while the nonelective is 2% of all your compensation. On $74,348 of compensation with a full $17,000 deferral, the match pays $510 and the nonelective pays $1,487. The match would only come out ahead on a deferral of about $49,565, which a SIMPLE does not allow. That is the statute: §408(p)(2)(A)(iii) measures the match on the amount the employee elects, §408(p)(2)(B) measures the nonelective on compensation.

When can I set one up?

Between 1 January and 1 October of the year it applies to. That is more generous than a 401(k), which has to exist before 31 December, but stricter than a SEP, which can be established after the year has ended up to the filing deadline including extensions. If the year is already over, the SEP is the one still available.

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