Question: I'm 57 with a great remote job, but after five years of working from home, my company wants me in the office full-time. I don't have the energy for a daily commute. Help!

Answer: In early 2020, many companies implemented remote work policies in response to the pandemic. And a good number of employees have been enjoying a fully remote schedule ever since.

But companies are increasingly asking workers to return to the office. And many are mandating it. CBRE reports that 77% of companies today across the U.S., Canada and Latin America expect employees to report to the office three days a week or more.

If you're 57 and have been working remotely for the past five years, you may feel that you don’t have the energy to start commuting daily. But if your employer wants you back in the office full-time, you may also feel like you don’t have a choice.

It’s hard to start over at a new employer at age 57, since you may be approaching the tail end of your career with plans to coast until retirement. Plus, it may not be so easy to get hired at 57.

Almost two-thirds of workers ages 50 and over have seen or experienced age discrimination in the workplace, according to AARP. It is especially a problem for older women. And while it’s illegal to pass over a qualified job candidate on the basis of age, it’s also a hard thing to prove.

Also, there’s no saying that if you were to apply for a new job, you’d be able to find one that’s fully remote. So all told, you’re looking at a tough situation. But that doesn’t mean there aren’t solutions.

It pays to have an open mind

After five years of remote work, the idea of a daily commute may be jarring. But Suzanne Hawes, a seasoned human resources consultant, says it’s important to have an open mind. If you like your job and the commute is the one sticking point, there may be ways to make it work.

The most important thing, she says, is to give commuting a chance.

“Often, it takes a few weeks to get used to the old routine again,” says Hawes. “If you were able to balance work and life before, it may be possible to find that balance going forward. If the only negative thing about the job is having to be in the office full-time, you might try it for a few months before deciding to leave.”

Diana Bernal, CEO and Career Strategist at Diana Inc, says you may be able to make the most of a commute.

"Use it as a chance to listen to audio books or podcasts," she suggests. And if you don't have to drive, you could read or watch TV and use the commute as an opportunity to enjoy some downtime.

Bernal also points out that if you can afford to do so, there may be ways to make your commute more comfortable.

"When I got a new job downtown that increased my commute, I leased a comfy Lexus, a nice step up from my Honda Accord," she explains.

Or, you may realize that there are benefits to being in the office, such as family, friends, or activities nearby. All told, it may not be so bad once you get used to it.

There may be some wiggle room

If you’re being asked to return to full-time office life, one thing to consider, says Hawes, is that your employer may be more flexible than you’d think.

“One possibility,” she says, “is to comply with the order and come back full-time for a few months. Then, see if your leadership is open to one or two work-from-home days. People who show they are willing to comply with the return-to-office order may find that buys them some flexibility.”

Hawes also says that the more leverage you have at your job, the more your employer may be willing to negotiate.

“If you’re a high performer or in a role that’s hard to replace, your leaders may be more willing to offer you a hybrid arrangement,” she explains.

Consider a new job or go freelance — if it fits your financial plans

If your employer insists on five days a week in the office and it doesn’t work for you, you could always look for a different job. But Hawes warns that it may be tough going.

“Not only is remote work harder to come by now,” she explains, “but in some locations, all jobs are harder to come by. If you’re going to leave your job because of a return-to-office order, either find your next job before you leave this one, or make sure you have enough savings to support a potentially long job search.”

Hawes says that while taking a lower-paying job with more flexibility may be possible, you should work with a financial adviser to understand how prepared you are for retirement now.

“If your planner says you’re in good shape, a lower-paying job may make sense,” she says. “But be clear about what you’re giving up in return for fully remote work. Are you used to a high level of independence and decision-making? Are you prepared for a role with less authority or visibility than you have today?”

Hawes says you can also consider a shift into freelance work if you can’t find a suitable job that will let you work from home. But there are risks involved.

Freelance income can be inconsistent, and it may take time to build up a steady stream of it.

Before going the freelance route, Hawes says, “Talk to people who are doing it and find out what it takes to get work. Ask how they price their services and, if they are willing to share, what they earn in a typical month.”

You’ll also need to consider the benefits you may be giving up by going freelance, such as employer-subsidized healthcare and access to a workplace retirement plan, like a 401(k).

“Many employers contribute to employee plans, often by matching contributions,” Hawes says. “That’s free money you would be giving up.”

The good news is that, as an independent contractor, you can save for retirement through vehicles such as SEP IRAs, Solo 401(k)s, or SIMPLE IRAs. And in some cases, you can contribute more than you could to a 401(k).

But as Hawes warns, “All of those contributions will be coming from you.”

Don’t rush into a decision

You may be tempted to quit your job if you’re forced to resume a five-day commute you’re dreading. But before you do that, Hawes says, it’s important to have a game plan.

“My recommendation would be to go back and approach it as an experiment,” she says. “Give it at least three months and pay attention to how you feel and how the rest of your life is functioning.”

If, after three months, you’re truly unhappy, you can explore other options. But as Hawes says, “If you still want to quit after that, take the time either to find another job that better fits your needs or to save enough money to give yourself a cushion while you build a freelance or consulting practice.”

Read More

• The Seven Best-Paying Side Gigs for Retirees
• Home Office Tax Deductions: Work From Home Write-Offs
• I'm 68 and Health Issues Forced Me to Retire. Should I Claim Social Security or Use My Savings Until I'm 70?
• I'm 51 and My Portfolio Is Up. I'm Planning to Retire at 60 and Want to Start Moving out of Stocks. Is That Smart?

Question: I'm 54 with a $320,000 IRA and am transitioning into self-employment with a projected annual income of $120,000. How much of that can and should I be saving for retirement? What are the best tools for self-employed savers?

Answer: Making the leap from a salaried position to self-employment can be challenging. However, there are also several benefits.

For one thing, being self-employed allows you to work from your location of choice. If you’re 54, you may no longer have the energy to deal with a lengthy commute. As more companies call employees back to the office full-time, transitioning to self-employment could mean getting to work from home and avoiding the hassle of daily commuting.

Or, it may be that you’re moving into self-employment to follow your passion. If you no longer have kids living under your roof and have a solid financial cushion, your mid-50s could be a good time to pursue a line of work you find more rewarding.

If you’re 54 with $320,000 in your IRA, you’re ahead of the game on the retirement savings front compared to the typical American your age. As of the second quarter of 2025, the average IRA balance for savers in their 50s was $129,222.

Still, that doesn’t mean you should necessarily be done saving for retirement. If you were to leave your $320,000 invested at a yearly 8% return until age 67, which is your full retirement age for Social Security, you could end up with around $870,000. That’s a nice-sized nest egg, but you may want more.

Becoming self-employed might make saving for retirement more challenging, at least initially. But it’s important to make it a priority.

Aim to save 15% of your income — once things stabilize

When you’re transitioning into self-employment, you might go through a period of income volatility. It’s okay to pause retirement plan contributions at the onset as long as you commit to starting back up again once your income stabilizes, says Brennan Decima, Founder and Managing Director at Decima Wealth Consulting.

“First, focus on creating six months of cash flow security to give some cushion for your variable income,” he says. “Once that is in place, I suggest to my clients to try and save at least 15% of their income towards retirement.”

Brian Heckert, Founder and Wealth Manager at FSM Wealth, Inc., agrees.

“Having been self-employed for the last 40 years, I have gone from boom to bust with the economy and market cycles,” he says. “Assuming everything is working well, and the $120,000 [annual income] is net of expenses, I would like to see them continue at least as much as they have been saving as an employee — hopefully at least 10-15% of the net income.”

Use the right retirement savings account

Being self-employed gives you more options when it comes to retirement savings plans.

“There are three qualified plan options available for a self-employed person – a Solo 401(k), a SEP IRA, and a SIMPLE IRA,” says Heckert. “All three plans are flexible from year to year, and the contributions can be made up until the tax deadlines.”

If you’re aiming to save 15% of a $120,000 income, or $18,000, all three of these accounts allow for a contribution that large at age 54, Heckert explains.

Decima happens to be a fan of the Solo 401(k) because it gives people “the flexibility of making tax-deductible contributions in years their income is higher, or doing Roth contributions in years where income is low.”

If you’re self-employed and pay yourself a salary, a Solo 401(k) may allow for higher contributions than other retirement plans. However, it’s best to consult a tax professional for advice on your specific situation, as there may be variables to consider outside of your self-employment income.

Make the process automatic

Once you get into a steady income flow, you may want to automate the process of funding a retirement account rather than write your savings a big check at the end of the year.

“It’s really easy to spend money when it comes directly to our bank accounts,” Decima says. “Automating the savings where it goes directly to the 401(k) conditions you to pay yourself first, making it easier to stay on track and reach your future goals."

One thing you may want to consider is automating a baseline contribution each month, and then assessing your net income at the end of each year. If your income allows for more savings, you can always make an additional contribution. But this way, your retirement account will have been funded throughout the year.

Don’t let fear hold you back

If you’ve been a salaried employee for most of your career, giving up the security of a stable paycheck can be daunting. But your 50s are actually a great time to take a chance on yourself, Decima insists.

"I recently left a high-paying job of almost 20 years to start my own company as well,” he explains. “The leap was both revitalizing and intimidating.”

If you end up in a self-employment situation that’s mentally and financially rewarding, it may be something you can continue doing during retirement. That could be a great way to stay busy later in life while boosting your income. In the near term, the key is to give yourself grace with retirement plan contributions initially while you adjust, but then prioritize them as soon as you’re in a good place income-wise.

Read More

• IRA Conversion to Roth: Rules to Convert an IRA or 401(k) to a Roth IRA
• Home Office Tax Deductions: Work From Home Write-Offs
• I'm 51 and My Portfolio Is Up. I'm Planning to Retire at 60 and Want to Start Moving out of Stocks. Is That Smart?
• I Want to Retire, but I Have to Keep Working so My Adult Kids Have Insurance

Did you max out your 2025 IRA contribution limit? If not, plan carefully to get the most out of your retirement accounts. You still have until April 15, 2026, to make a contribution to your Roth and traditional IRAs for 2025 before you start using your 2026 limit. Read on for 2025 and 2026 contribution limits.

IRAs have become even more valuable tools for retirement savings in the years since employers began moving away from traditional pensions. As companies shifted to defined contribution plans such as 401(k)s, workers needed new ways to save for their future, increasing the importance of savings opportunities outside the scope of employment.

The Employee Retirement Income Security Act of 1974 (ERISA) established the IRA account, and by 1975, workers who had no access to employer-sponsored retirement plans could contribute up to $1,500 per year. Over the years, the number of people eligible to contribute to an IRA has grown, as have the types of IRAs available.

By mid-2023, 55.5 million (or 42.2%) U.S. households reported owning individual retirement accounts (IRAs), according to a 2023 ICI report on The Role of IRAs in US Households’ Saving for Retirement. IRA accounts held $14.5 trillion at the end of June 2025, over one-third of total retirement assets of $40 trillion.

The following tables provide a quick overview of contribution limits, income thresholds, and rollover rules for Roth, traditional, SIMPLE and SEP IRAs. For deeper planning advice and detailed regulations, follow the links provided in each section.

Consider the backdoor Roth option if your income exceeds the limit.

If you earn too much to contribute to a Roth IRA, all may not be lost. You can still access these accounts indirectly through a backdoor Roth IRA.

Creating a backdoor Roth IRA is a two-step process. First, you open a traditional IRA using after-tax dollars instead of the pre-tax money you usually fund these accounts with. Then, you convert the traditional IRA to a Roth, but because none of the contributions were deductible, no income tax is owed on the conversion.

While there are no income limits for setting up a nondeductible IRA or making a Roth conversion, contributions through the back door have the same annual limit in 2025 and 2026. For more information, read Backdoor Roth IRAs: Good for Wealthy Retirees? and get up-to-speed on the pro-rata rule and how to manage withdrawals.

A non-deductible IRA

A non-deductible IRA isn’t a type of retirement account; it refers to nondeductible contributions that you make to a traditional IRA. It’s a retirement savings strategy for those whose income exceeds the limits to make deductible IRA contributions or to contribute to a Roth IRA. You will need to file a Form 8606 for every year you made nondeductible IRA contributions

But be aware that making nondeductible contributions to a traditional IRA will complicate your life when it comes time to withdraw funds from your IRA. Why? Because each withdrawal from that traditional IRA will be a combination of your nondeductible contributions, your tax-deductible contributions and all their earnings. And as you take distributions, the ratio will change. How to Calculate Tax-Free and Taxable IRA Withdrawals can give you a clearer picture of how the process works.

SEP Plan criteria for eligible employees and contribution limits

Requirement for equal contributions. SEP plans provide some flexibility to employer owners when cash flow is tight. There's no requirement or obligation for the business owner to make contributions each year, but when they do the percentage of income contributed to a SEP IRA must be the same across all eligible employees, including the owner.

Eligibility to contribute to a SEP IRA. Unlike other retirement plans, there are specific criteria for being eligible to have a SEP IRA as an employee.

You must:

• Be age 21 or older
• Meet the 3-of-5 rule, meaning you've been employed full time by the company for any period of time during at least 3 of the last 5 year
• Earn the minimum annual compensation from the SEP IRA-sponsoring employer. For 2026 that is $800 and $750 for 2025.

A company may exclude the following from its SEP IRA:

• Employees that are covered by a union collective bargaining agreement for retirement benefits
• Employees who are not U.S. residents and do not receive US wages.

SIMPLE Employer (Mandatory) Contribution Limits

SIMPLE IRAs operate differently than other IRAs. And it's important to note that employees cannot make SIMPLE IRA contributions on their own behalf. SEP IRA contributions are made by the employer/business owner rather than by individuals/employees, and contribution amounts are determined by the business, subject to IRS limits.

Another unique feature of a SIMPLE IRA plan is that the percentage of income contributed by an employer/owner to a SIMPLE IRA must be the same for all eligible employees, including the owner. For the 2025 tax year, the deadline to contribute to a SIMPLE IRA is April 15, 2026, or the business's tax filing deadline, including extensions up to October 15, 2026.

An employer must contribute to a plan and can choose either of the following SIMPLE IRA employer match rules:

• Make a non-elective contribution of at least 2% of compensation for all eligible employees. You may limit these non-elective contributions to eligible employees earning at least $5,000, although you do not have to do so. Maximum compensation for 2026 is $360,000 and $350,000 for the 2025 tax year.
• Make a matching contribution of 100% up to the first 3% of compensation.  Employees only get this matching contribution if they contribute to the plan.
• Allow additional nonelective contributions to SIMPLE IRA plans. Section 116 of the SECURE Act 2.0 allows employers to make additional contributions to their employees “in a uniform manner,” as long as the contribution does not exceed either up to 10 percent of compensation or $5,000, whichever is less.

SIMPLE IRA deadlines

SIMPLE IRAs have set-up deadlines and contribution deadlines.

Setup deadline: A plan cannot have an effective date later than October 1 for current-year contributions.

Contribution deadline: Employers must make contributions by the business's tax-filing deadline. They must deposit salary deferral contributions from employees no later than 30 business days after the end of the month they were deferred.

Employers are required to make annual contributions to a SIMPLE IRA plan. At minimum, an employer must either match employee contributions, up to 3% of compensation (and no less than 1%), or contribute up to 2% of compensation for all eligible employees, regardless of whether the employee contributes.

Here are some important rules and limitations about rollovers:

Number of rollovers: the once-per-year rollover rule. You can only make one 60-day indirect rollover, where you receive a check from an IRA and deposit it into another IRA within 60 days, from all of your IRAs (including Traditional, Roth, SEP, and SIMPLE IRAs) within a 12-month period.

Three exceptions to the once-per-year rollover rule. This rule doesn't apply to: (1) trustee-to-trustee transfers — direct transfers of funds between IRA custodians, (2) rollovers to/from qualified plan — rollovers from or to 401(k)s, 403(b)s, etc. and (3) Roth conversions — converting a Traditional IRA to a Roth IRA.

Rollovers from pre-tax accounts to a Roth IRA. If you rollover funds from a traditional, SIMPLE or SEP IRA to a Roth IRA, you will have to include the rollover amount on your tax return and pay income taxes.

Limitations on rollover to SIMPLE IRAs. Rollovers into a SIMPLE IRA from traditional and SEP IRAs, as well as employer-sponsored retirement plans, applies only to contributions made after December 18, 2015. Contributions made prior to that date are ineligible to rollover into a SIMPLE IRA.

Related Content

• 6 Changes to IRAs, 401(k)s and HSAs in 2026
• Roth IRA Contribution Limits for 2026
• SEP IRA Contribution Limits for 2026
• SIMPLE IRA: What It Is and How It Works
• SIMPLE IRA Contribution Limits for 2026
• Qualify for Roth IRA Contributions by Lowering Your Income

Traditional IRA withdrawals can push more of your Social Security into the taxable zone, up to 85%, which can add up over time. That's why it's important to get smart about when and how you pull money from your traditional IRA, helping you keep thousands more in your pocket every year.

Pairing Social Security with your IRA is one of the best ways to power your retirement, but skip the tax surprise. Done right, it’s a powerful income strategy — done wrong, it can quietly eat a big chunk of your retirement cash.

Let’s take a deeper look at how IRAs impact your Social Security.

How IRAs impact Social Security: Taxes on Social Security benefits

As much as 85% of your Social Security benefits are subject to federal income taxes. This is based on your “combined income,” or your adjusted gross income (AGI) plus nontaxable interest and half your annual Social Security benefits. You will include your spouse's combined income if you file jointly.

As for the AGI, it includes wages, interest, investment income and distributions from traditional 401(k)s and IRAs. You can then make adjustments, such as for a health savings account (HSA) and other calculations that might change your AGI.

Here's a look at the taxes due on Social Security benefits for individuals and couples filing jointly.

• If your combined income is under $25,000 (single) or $32,000 (married filing jointly), your Social Security benefits are not taxed.
• For combined income between $25,000 and $34,000 (single) or between $32,000 and $44,000 (married filing jointly), up to 50% of your benefits might be taxed.
• For combined income above $34,000 (single) or above $44,000 (married filing jointly), up to 85% of your benefits might be taxed.

Suppose you and your spouse are retired. Your combined Social Security benefits are $35,000, and you take an IRA distribution of $35,000.

Half the Social Security benefits total $17,500, which you then add to the IRA distribution for a total of $52,500 in combined taxable income.

However, while this amount is above the threshold for being taxed at as much as 85% of the benefits, this does not necessarily mean you will pay at this level. This is the maximum.

You can use Worksheet 1 from the IRS to calculate your taxable benefits. But this is a complex area, and it's a good idea to seek the help of a tax expert or use tax software.

However, if you hadn't taken an IRA distribution, the Social Security benefits would have been tax-free.

How IRA withdrawals trigger Medicare surprises

Another issue with an IRA withdrawal is that it can push you into a higher Medicare Income-Related Monthly Adjustment Amount (IRMAA) bracket.

“This increases your Medicare premium,” said Marcus Holzberg, a certified financial planner™ at Holzberg Wealth Management. “Since Medicare is deducted from your Social Security check, this will inadvertently reduce your Social Security benefits.”

Traditional IRA withdrawals, including required minimum distributions (RMDs), count as taxable income, which raises your Modified Adjusted Gross Income (MAGI). That's important to understand because Medicare uses your MAGI from two years earlier to determine whether you owe an income-related monthly adjustment amount, or IRMAA, surcharge on top of your standard Part B and Part D premiums.

For example, IRMAA kicks in for singles with MAGI above $109,000, or $218,000 for married couples filing jointly, in 2026. Making a large IRA withdrawal in a given year can easily push you over these thresholds, triggering higher monthly premiums that apply for the entire following year. Even a $1 bracket change can add hundreds or thousands of dollars annually in surcharges, with couples possibly facing double the impact.

Generally, qualified Roth IRA withdrawals do not count toward your MAGI, which is one reason many retirees use Roth conversions in lower-income years to manage future IRMAAs.

Do IRA withdrawals count as income for Social Security?

Despite what you might have heard, the Social Security Administration doesn't count IRA distributions as earned income when determining Social Security payments. The same goes for pension payments, annuities or interests and dividends from savings and investments.

None of that will lower your monthly benefits, although it can cause a taxable event if your AGI increases as a result.

Required minimum distributions (RMDs)

To avoid taxes on your Social Security benefits, you can defer taking distributions from your IRA. The added benefit is that your money can grow over time.

But there is a limitation: required minimum distributions (RMDs). This is when you must make withdrawals from your traditional IRA or other pre-tax retirement accounts such as a Simple IRA, SEP IRA, 401(k) or 403(b). The amount is considered income for the taxes on your Social Security benefits.

RMDs are triggered based on your age — 73 if you were born between 1951 and 1959, jumping to 75 if you were born in 1960 or later. The amount of the withdrawal is based on an IRS calculation, which includes the account balance and your life expectancy. If you don't make the distribution, you'll be subject to paying income taxes and a 25% penalty.

One way to handle the impact of RMDs is by taking a qualified charitable distribution (QCD). “This allows you to use distributions from your IRA to contribute directly to qualified charities,” said Holzberg. “In doing this, the IRA distribution is not included in your income, thereby lowering your AGI.”

On the other hand, you can delay when you claim Social Security benefits. You can wait until age 70. For every year you delay receiving the benefits, your annual payment increases by about 8%.

Traditional vs Roth IRAs: Which one is better on your Social Security check?

When it comes to tapping into your retirement income, the type of IRA you have can affect how much of your Social Security benefits are subject to federal taxes.

Traditional IRAs let you deduct contributions upfront, but withdrawals count as ordinary taxable income. That extra income boosts your combined income — your adjusted gross income plus nontaxable interest, plus half your Social Security benefits — which can push you over the thresholds where up to 85% of your benefits get taxed federally.

Roth IRAs offer a clear advantage because contributions are made with after-tax dollars, and qualified withdrawals are tax-free and do not increase your adjusted gross income (AGI).

As a result, these distributions are excluded when calculating your combined income, so they don't affect whether your Social Security benefits are subject to federal income tax. That's a big advantage. This also helps prevent your benefits from being pushed into the 50% or 85% taxable range, avoiding any unexpected tax liability from those withdrawals.

IRAs and Social Security

At the end of the day, the way you manage your IRA can either protect or erode the after-tax value of your Social Security benefits. The key is planning rather than reacting later.

That might mean making Roth conversions during lower-income years, spacing out traditional withdrawals to stay below the tax threshold, or aligning distributions around RMDs. The small steps you take today can make a meaningful difference in how much you have on hand in retirement.

Tax rules and your personal circumstances can vary. Consult with a financial adviser or tax professional to run your specific numbers and maximize what you actually keep. That way, you can enjoy your retirement with fewer surprises.

Read More

• Traditional IRA Basics: 10 Things to Know to Build Wealth
• The 'Take That, Uncle Sam' Rule of Retirement Spending
• 10 Reasons to Leave Your Heirs a Roth IRA
• Tending to Your Estate Plan This Spring? Don't Forget to Give Your IRA Some Love
• Inherited an IRA? Key Distribution Rules to Know

A Savings Incentive Match Plan for Employees (SIMPLE) IRA is a retirement plan specifically designed for self-employed individuals and small businesses with 100 employees or fewer. It's a more affordable (and easier) plan for employers to set up compared to a traditional 401(k). However, the amount a worker can save in a SIMPLE IRA is less than what they can save in a 401(k).

2026 SIMPLE IRA contribution limits

The SIMPLE IRA contribution limit increased for 2026. Keep in mind that contributions to SIMPLE IRA accounts are always 100% vested by the employee.

In 2026, employees at small businesses can now contribute up to $17,000 (an increase from $16,500 in 2025) or $21,000 if aged 50 or older (an increase from $20,000 in 2025), as per new IRS guidelines. The catch-up contribution limit for employees aged 50 and over has increased to $4,000 for 2026 (up from $3,500 in 2025), bringing total contributions for this age group to $21,000, according to the IRS.

Due to a change in SECURE 2.0, a different catch-up limit applies to employees aged 50 and over who participate in certain SIMPLE plans. That limit remains $3,850, unchanged from 2025.

Also, thanks to SECURE 2.0, individuals can contribute an even higher amount to certain SIMPLE retirement accounts (generally, employees of small businesses with 25 or fewer workers). For 2026, this higher amount is increased to $18,100, up from $17,600 for 2025.

By comparison, workers younger than 50 can set aside $24,500 in a traditional 401(k) in 2026, up from $23,500 last year. They can add another $8,000 if they're 50-plus.

Under SECURE 2.0 (enacted in 2022), the enhanced "super catch-up" contribution limits for participants aged 60 to 63 are:

401(k) plan participants: Individuals age 60 to 63 may contribute an additional $11,250 instead of the standard $8,000, raising the total limit to $35,750 in 2026.

SIMPLE IRA participants: Individuals aged 60 to 63 with a SIMPLE IRA cannot contribute the additional $11,250 that those with a 401(k) can. Instead, they are subject to the regular SIMPLE IRA limits and are eligible for a catch-up contribution of $5,250, resulting in a total contribution limit of $22,250.

Employee contributions to a SIMPLE IRA are made on a pretax basis, which lowers taxable income. The invested money grows tax-sheltered until you withdraw it in retirement, when those distributions are taxed as ordinary income.

If you pull money out before age 59-1/2, you face a 10% early-withdrawal penalty on top of taxes. The withdrawal penalty increases to 25% for SIMPLE IRAs if money is pulled out within two years of signing up for the plan.

2026 SIMPLE IRA contribution deadlines for employees and employers

There are different deadlines for self-employed owners with no employees, employees and employers to make contributions to SIMPLE IRAs.

Employee contributions. Contributions to SIMPLE IRA plans that are taken from an employee's paycheck as salary reduction contributions (also called elective deferral contributions) are due within 30 days after the end of the month in which the amounts would otherwise have been payable to the employees in cash. For instance, contributions must be deposited into the SIMPLE plan by September 30 of the same year for money taken from an employee's pay in August.

Self-employed with no employees. For self-employed persons with no common-law employees, the latest date for depositing salary reduction contributions for a calendar year remains 30 days after the end of the year, or January 30.

Deadlines for employer contributions. The IRS requires contributions made on behalf of the employer to be due by the business's filing due date for the tax year — April 15 or October 15 if an extension is filed.

The Department of Labor (DOL) requires employee contributions to be deposited as soon as reasonably possible. For businesses with over 100 employees, contributions must be deposited no later than 30 days after the end of the month in which the amounts would otherwise have been payable to the employee, and no later than seven business days for businesses with fewer than 100 employees.

New Roth SIMPLE IRA

A SIMPLE IRA can now be set up as either a traditional IRA or a Roth IRA. The Roth SIMPLE IRA was created by the 2022 SECURE Act 2.0, so some employers may not offer it yet.

If the SIMPLE IRA is a Roth, the employee contribution goes into the account after tax. Then the money can grow tax-free for decades and will be tax-free when withdrawn from the account beginning at age 59-½.

For 2026, employees can contribute up to $17,000 (up $500 from $16,500 in 2025) and $21,000 (up from $19,500 in 2025) for employees age 50 and over. Roth contributions are not deductible, but distributions are tax-free in retirement.

These dollar limits are aggregate for all pre-tax and Roth deferrals; in other words, you can’t contribute $17,000 in pre-tax deferrals and then an additional $17,000 in Roth deferrals in 2026.

Similar to 401(k) plans, employees will likely be able to contribute any combination of pre-tax and Roth deferrals up to the annual limit. For example, an employee under age 50 may be able to contribute $10,000 in pre-tax deferrals and $7,000 in Roth deferrals to reach the $17,000 limit in 2026.

Employer contributions to SIMPLE IRAs

Workers participating in a SIMPLE IRA will always get a helping hand saving for retirement because employers must make some form of a contribution to employees' accounts. Self-employed people are allowed to contribute both their own and the employer’s share to a SIMPLE IRA.

An employer can choose to either make a dollar-for-dollar match of up to 3% of a worker's pay or contribute a flat 2% of compensation, whether the employee contributes or not. If your employer matches dollar-for-dollar up to 3% of pay, make sure you're contributing at least enough to qualify for the full match. If an employer contributes the flat 2% amount, the calculation for those non-elective contributions cannot be based on more than $360,000 in 2026 (up from $350,000 in 2025) of the employee’s salary.

The money your employer contributes is vested immediately, which means those contributions are yours from the start and you get to take them with you when you leave no matter how long you’ve worked for the company. By contrast, other employer retirement savings plans, such as 401(k)s and 403(b)s, may require that you work for that employer for a set period, such as three or four years, to be fully vested.

SIMPLE IRAs offer a much broader selection of investments than most employer-sponsored retirement savings plans. In a SIMPLE IRA, workers can not only choose from thousands of mutual funds and exchange-traded funds but also hold individual stocks and bonds. The best investment is one that fits your long-term goals at the right price.

How SIMPLE IRA savers can build an even bigger nest egg

SIMPLE IRA participants are allowed to contribute to an individual IRA at the same time, enabling retirement savers to maximize their contributions on two fronts. If you're already stashing away the maximum contribution allowed in your SIMPLE IRA — $17,000 for employees younger than 50, or $21,000 for 50-plus workers in 2026 — but want to save even more for retirement, consider opening a separate traditional IRA or Roth IRA.

Self-employed people may also fund a traditional IRA or Roth at the same time, as well as a SEP IRA, provided they adhere to overall contribution limits. In 2026, the contribution limit for individual IRAs is $7,500, and the catch-up contribution limit is $1,100 for those aged 50 and over, allowing them to contribute an additional amount to their accounts.

For 2026, individuals younger than 50 can contribute up to $7,500 (up from $7,000 in 2025) to a traditional IRA or Roth IRA. Retirement savers age 50 and up can make an additional $1,100 catch-up contribution. There is no super catch-up contribution for traditional or Roth IRAs.

Roth IRAs have income limits. The maximum amount you can contribute to a Roth IRA for 2026 begins to phase out once modified adjusted gross income hits $153,000 for single filers and $242,000 for those who are married and filing jointly.

There's no tax deduction for Roth IRA contributions. Contributions to a traditional IRA for both 2025 and 2026 are tax-deductible, though this benefit will phase out if you also contribute to a 401(k) plan at work and reach a certain income threshold. The tax deduction phases out for single filers who have a modified gross income between $81,000 and $91,000 in 2026 (up from $79,000 and $89,000 in 2025).

If an IRA contributor is covered by a work retirement plan, joint filers must earn $129,000 or less to claim the full tax deduction in 2026 (up from $126,000 in 2025). The deduction is fully phased out once you make $149,000 or more in 2026 (up from $146,000 in 2025).

If an IRA contributor is not covered by a retirement plan at work, then the deduction is phased out between $242,000 and $252,000 in 2026, up from $236,000 and $246,000 for joint filers in 2025.

What you need to know about SIMPLE IRAs

SIMPLE IRAs have fewer rules and offer lower start-up and operating costs compared to traditional retirement plans, making them a practical choice for small businesses.

SIMPLE IRAs are required by law to match employee contributions, but employee matching is an excellent way for employers to help attract and retain employees.

Matching employer contributions are vested immediately and can go with employees whenever they leave, regardless of how long they’ve been on the job. These plans also provide tax-deferred growth on contributions until the funds are withdrawn.

Related Content

• IRA and SEP Rules at a Glance: Contribution Limits, Income Limits and Rollover Options
• Roth IRA vs. Traditional IRA: Which Is Better?
• The Average IRA Balance by Age
• Qualify for Roth IRA Contributions by Lowering Your Income

For many small business owners, setting up an employee retirement plan is expensive, complex, and requires federal filing they’d rather not deal with. A SIMPLE IRA is a retirement savings designed for small businesses with 100 or fewer employees. The lower costs and ease of setup make it appealing for small business owners who don’t want to break the bank to provide their employees with a retirement plan.

How does a SIMPLE IRA work?

A SIMPLE IRA offers a tax-deferred savings plan for employees at small businesses and self-employed individuals to save for retirement. SIMPLE is an abbreviation for Savings Incentive Match Plan for Employees.

This type of Individual Retirement Account (IRA) makes it optional for employees to contribute to their retirement savings while requiring employers to match their contributions or contribute a mandatory percentage to employee accounts.

How does it work?

Under a SIMPLE IRA, employees and employers contribute funds to the employee’s retirement account. Employee participation is optional. Whether your workers participate or not, employers still contribute to their retirement accounts.

Employers choose between matching employee contributions by up to 3% (and no less than 1%) or making a mandatory contribution of 2%. From the start, employees are 100% vested in the SIMPLE IRA, meaning all of the contributions made to the account belong to them.

If you’re interested in providing a SIMPLE plan for your small business, self-employment, or sole proprietorship, you’ll need to fill out one of two forms with the IRS– Form 5304-SIMPLE or Form 5305-SIMPLE. This depends on whether you want to choose a financial institution for all employee plans (Form 5305) or if you want employees to choose their own bank or financial institution (Form 5304).

2024 and 2025 contribution limits

The contribution limits on a SIMPLE IRA are lower than other retirement savings plans. That means your employees won’t be able to save as aggressively as they would with other retirement plans, which could be a disadvantage. In 2024, SIMPLE IRA contributions are limited to $16,000. If you have employees aged 50 and older, they’re eligible to make an added catch-up contribution of $3,500 to a SIMPLE IRA plan for a total of $19,500.

For 2025, the contribution limit will go up by $500 to $16,500. The catch-up limit for those age 50 and over is unchanged in 2025, making the total contribution limit, including catch-up contributions, $20,000.

For perspective, a 401(k) retirement plan has contribution limits of $23,000 in 2024, plus a $7,500 catch-up contribution limit. The contribution limit will rise by $500 to $23,500 in 2025, but the catch-up contribution limit is unchanged. In 2024, under a 401(k) plan, employees under 50 years old could save a maximum of up to $7,000 more through their contributions than with a SIMPLE IRA. Employees 50 and older could save up to $11,000 more under a 401(k) plan.

New super catch-up contribution for those aged 60, 61, 62 and 63

Both 401(k) and SIMPLE IRAs have new rules for catch-up contributions in 2025, due to SECURE 2.0. A higher catch-up contribution limit applies for those aged 60-63 beginning next year. 401(k) plan participants in that age range may contribute an additional $11,250 instead of $7,500, raising the total limit to $34,750 in 2025.

The new catch-up contribution limit in 2025 for SIMPLE IRAs will increase to the greater of $5,000 or 150% of the regular age 50 catch-up contribution limit for SIMPLE IRA plans. This supersized catch-up contribution is $5,250 for 2025, for a contribution total limit of $21,750, which is still less than 401(k) limits. Cost of living adjustments to the catch-up limit will begin in 2026.

The barriers to entry for a SIMPLE IRA are lower than other retirement plans, making it ideal for a budding small business that’s cautious of added costs. Is a SIMPLE IRA the right choice for your business? Let’s break down the pros and cons of this retirement plan.

SIMPLE IRA pros

• 100% Vested: Employees are 100% vested from the start. All contributions to the retirement account belong to them and can be taken with them if they change jobs.
• Tax Credit: Employers with 51 to 100 employees receive a tax credit under the SECURE Act, which is 50% of the administrative costs of setting up a retirement plan for employees. Employers with 50 or fewer employees could receive a tax credit of 100% of the administrative costs under the SECURE 2.0 Act.
• No filing requirement: There’s no filing requirement under this savings plan which makes maintenance easier.
• Contribute to other plans: Employees can still contribute to retirement plans with other employees or on their own.
• Lower set-up costs: Compared to other retirement plans, the SIMPLE IRA costs less to set up and maintain. Under financial institutions like Merrill Edge and Fidelity, there are no setup or maintenance fees.

SIMPLE IRA cons

• Lower contribution limits: SIMPLE IRAs restrict your employees’ tax-deferred contributions by up to $12,000 vs a 401(k) plan.
• No loans: If an employee needs money from their SIMPLE plan, there’s no option for a loan, unlike other retirement plans. Instead, they might have to do an early withdrawal, which carries heavy tax penalties and could put them significantly behind on retirement.
• Strict Rollover Rules: If an employee leaves the company and tries to roll over their balance, they have limited options. Rolling over to a Roth IRA, Traditional IRA, or 403(b) account carries a 25% penalty if they don’t meet the two-year waiting period. Otherwise, their only choice is another SIMPLE IRA.
• No other retirement plan: Employers who adopt the SIMPLE plan can’t have another retirement plan option for their employees.

Should I choose a SIMPLE IRA?

Choosing a SIMPLE IRA could allow your employees to save for retirement with tax-deferred earnings while you support their savings goals through a matching contribution. It's easier to set up and maintain compared to other employer-offered retirement accounts and even costs less. However, employees who want to save aggressively for retirement might be disappointed by the lower contribution limits. Still, it’s a great option for employers who don’t want the heavy maintenance, filing requirements, and costs associated with other retirement plans.

Related Content

• Five Changes Coming to IRAs and 401(k)s in 2025
• Solo 401(k) vs. SEP IRA vs. SIMPLE IRA
• IRA and 401(k) Contribution Limit Changes for 2025: What to Know
• Retirement Planning for the Self-Employed: 5 Options

A SIMPLE IRA is a retirement plan designed for small businesses with 100 or fewer employees. It's a cheaper (and easier) plan for an employer to set up when compared to an traditional 401(k); however, the amount a worker can save in a SIMPLE IRA is less than a 401(k).

>>For more 2020 tax changes, see Tax Changes and Key Amounts for the 2020 Tax Year.<<

2020 SIMPLE IRA Contribution Limits

For 2020, the annual contribution limit for SIMPLE IRAs was bumped up to $13,500 (that's $500 more than the limit for 2019). Workers age 50 or older can make additional catch-up contributions of $3,000, for a total of $16,500. By comparison, workers younger than 50 can salt away as much as $19,500 in a traditional 401(k) for 2020, plus another $6,500 if they're 50-plus.

Employee contributions to a SIMPLE IRA are made on a pretax basis, which lowers taxable income. The invested money grows tax-sheltered until you withdraw it, at which time the distributions will be taxed as ordinary income. If you pull money out before age 59 1/2, you face a 10% early-withdrawal penalty on top of taxes. The withdrawal penalty increases to 25% for SIMPLE IRAs if money is pulled out within two years of signing up for the plan.

Unlike some other retirement plans, a SIMPLE IRA doesn't offer a Roth option, which would allow workers to invest after-tax dollars in the plan and not to be taxed on withdrawals later in retirement.

Employer Contributions to SIMPLE IRAs

Good news for workers participating in a SIMPLE IRA: Employers must make some form of a contribution to employees' accounts. An employer can choose to either make a dollar-for-dollar match of up to 3% of a worker's pay or contribute a flat 2% of compensation, whether the employee contributes or not.

Most employers choose the dollar-for-dollar match of up to 3%, says Ronald Oldano, a certified financial planner and private wealth adviser in Orlando, Fla. However, if an employer has a bad year financially, there's some wiggle room to lower the employer match to 1% or 2% for two years of a rolling five-year period. For example, a company just starting a SIMPLE IRA can elect to match 1% or 2% of each employee's salary for the first two calendar years of the plan, but then must ramp up its match to 3% for the next three years. Once that five-year period is over, the employer can again lower its matching contribution.

If your employer is like most and matches dollar-for-dollar up to 3% of pay, make sure you're contributing at least enough to qualify for the full match.

Also, remember to pick your investments wisely. SIMPLE IRAs can hold a basket of investments, from stocks and bonds to mutual funds and exchange-traded funds. The best investment is one that fits your long-term goals at the right price.

How SIMPLE IRA Savers Can Build a Bigger Nest Egg

If you're already stashing away the maximum contribution allowed in your SIMPLE IRA—$13,500 for employees younger than 50 or $16,500 for 50-plus workers—but want to save even more for retirement, consider opening a separate traditional IRA or Roth IRA, suggests Clark Randall, a certified financial planner and founder of Financial Enlightenment, in Dallas.

For 2020, individuals younger than 50 can contribute up to $6,000 to a traditional IRA or Roth IRA. Retirement savers age 50 and up can make an additional $1,000 catch-up contribution. Roth IRAs have income limits. The maximum amount you can contribute to a Roth IRA for 2020 begins to phase out once modified adjusted gross income hits $124,000 for singles ($196,000 if married filing jointly). There's no tax deduction for Roth IRA contributions. Contributions to a traditional IRA for 2020 are fully tax-deductible for singles and couples as long as one spouse doesn't have a retirement plan through work. If one spouse is covered by a work plan, joint filers must earn $196,000 or less to claim the full tax deduction.

A Savings Incentive Match Plan for Employees IRA, or SIMPLE IRA for short, is a retirement plan designed for small businesses with 100 or fewer employees. Though a SIMPLE IRA is an easier and less expensive plan for employers to set up than a traditional 401(k) plan, the amount a worker can save in a SIMPLE IRA is less than a 401(k), too.

2019 SIMPLE IRA Contribution Limits

For 2019, the annual contribution limit for SIMPLE IRAs was bumped up to $13,000. Workers age 50 or older can make additional catch-up contributions of $3,000, for a total of $16,000. By comparison, workers younger than 50 can salt away as much as $19,000 in a traditional 401(k) for 2019, plus another $6,000 if they’re 50-plus.

Employee contributions to a SIMPLE IRA are made on a pretax basis, which lowers taxable income. The invested money grows tax-sheltered until you withdraw it, at which time the distributions will be taxed as ordinary income. If you pull money out before age 59 1/2, you face a 10% early-withdrawal penalty on top of taxes. The withdrawal penalty increases to 25% for SIMPLE IRAs if money is pulled out within two years of signing up for the plan.

Unlike some other retirement plans, a SIMPLE IRA doesn’t offer a Roth option, which would allow workers to invest after-tax dollars in the plan and not to be taxed on withdrawals later in retirement.

Employer Contributions to SIMPLE IRAs

Good news for workers participating in a SIMPLE IRA: Employers must make some form of a contribution to employees’ accounts. An employer can choose to either make a dollar-for-dollar match of up to 3% of a worker’s pay or contribute a flat 2% of compensation, whether the employee contributes or not.

Most employers choose the dollar-for-dollar match of up to 3%, says Ronald Oldano, a certified financial planner and private wealth adviser in Orlando, Fla. However, if an employer has a bad year financially, there’s some wiggle room to lower the employer match to 1% or 2% for two years of a rolling five-year period. For example, a company just starting a SIMPLE IRA can elect to match 1% or 2% of each employee’s salary for the first two calendar years of the plan, but then must ramp up its match to 3% for the next three years. Once that five-year period is over, the employer can again lower its matching contribution.

If your employer is like most and matches dollar-for-dollar up to 3% of pay, make sure you’re contributing at least enough to qualify for the full match.

Also, remember to pick your investments wisely. SIMPLE IRAs can hold a basket of investments, from stocks and bonds to mutual funds and exchange-traded funds. The best investment is one that fits your long-term goals at the right price.

How SIMPLE IRA Savers Can Build a Bigger Nest Egg

If you’re already stashing away the maximum contribution allowed in your SIMPLE IRA -- $13,000 for employees younger than 50 or $16,000 for 50-plus workers -- but want to save even more for retirement, consider opening a separate traditional IRA or Roth IRA, suggests Clark Randall, a certified financial planner and founder of Financial Enlightenment, in Dallas.

For 2019, individuals younger than 50 can contribute up to $6,000 to a traditional IRA or Roth IRA. Retirement savers age 50 and up can make an additional $1,000 catch-up contribution. Roth IRAs have income limits. The maximum amount you can contribute to a Roth IRA for 2019 begins to phase out once modified adjusted gross income hits $122,000 for singles ($193,000 if married filing jointly). There’s no tax deduction for Roth IRA contributions. Contributions to a traditional IRA for 2019 are fully tax-deductible for singles and couples as long as one spouse doesn’t have a retirement plan through work. If one spouse is covered by a work plan, joint filers must earn $193,000 or less to claim the full tax deduction.