---
title: SIMPLE IRA Contribution Limits for 2022 & 2023
description: Learn about the basics of a SIMPLE IRA - eligibility, contribution limits and deadlines, and tax implications. Click here to read the full article.
image: https://www.carboncollectiveinvesting.com/hubfs/SIMPLE_IRA_Contribution_Limits_for_2022_-_FI.png
---

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**[Home](https://www.carboncollectiveinvesting.com/) > [B2B 401k](https://www.carboncollectiveinvesting.com/401k) >** SIMPLE IRA Contribution Limits for 2022 & 2023

# SIMPLE IRA Contribution Limits for 2022 & 2023

![](https://www.carboncollectiveinvesting.com/hubfs/zach-stein.jpeg)

 Written by Zach Stein  |  Reviewed by [Subject Matter Experts](https://www.carboncollectiveinvesting.com/subject-matter-experts)

Updated on October 1, 2024

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### Table of Contents

## **What Is a SIMPLE IRA?**

SIMPLE IRA stands for Savings Incentive Match Plan for Employees.

It is a retirement savings plan that is available to small businesses with 100 or fewer employees. It combines the features of a traditional IRA and [401(k)](https://www.carboncollectiveinvesting.com/sustainable-investing/401k-plan).

## **Eligibility**

To be eligible to contribute to a SIMPLE IRA, you must be an employee of a small business with fewer than 100 employees. You must also have earned at least $5,000 from the company in the previous two calendar years and expect to earn at least $5,000 in the present calendar year.

[![Have specific questions? Schedule a strategy call with a 401(k) expert.](https://hubspot-no-cache-na2-prod.s3.amazonaws.com/cta/default/20345524/5da4aa34-813f-4541-b8d2-16a0f2891c8d.png)](https://hubspot-cta-redirect-na2-prod.s3.amazonaws.com/cta/redirect/20345524/5da4aa34-813f-4541-b8d2-16a0f2891c8d)

## **Contributions**

Contributions to a SIMPLE IRA are made of [pre-tax](https://www.finra.org/investors/insights/tax-advantaged) dollars, meaning they are deducted from your paycheck before taxes are withheld.

Employees may or may not make contributions to their SIMPLE IRA, and they are prohibited from opting out of receiving non-elective contributions from their employers.

## **Employer Match**

Employers are required to make contributions on behalf of their employees.

The employer match can either match employee contributions dollar-for-dollar up to 3% of the employee's pay or a flat 2% of pay.

## **Tax Implication**

Because employee contributions to a SIMPLE IRA are made with pre-tax dollars, this reduces your taxable income for the year and may lower your overall tax liability.

Employer contributions are also deductible as a business expense. This can lower the business's overall tax liability also.

SIMPLE IRAs are cheap and easy-to-administer retirement savings plan options for small businesses.

## **SIMPLE IRA Contribution Limits for 2023**

Compared to traditional and Roth IRAs, SIMPLE IRAs have the advantage of higher contribution limits. Below are the contribution limits to SIMPLE IRAs:

### **Employee SIMPLE IRA Contribution Limit**

The SIMPLE IRA contribution limit for employees is $15,500 for 2023. This was $14,000 in 2022.

### **Employer SIMPLE IRA Contribution Limit**

Employers can make contributions of up to 3% of employee pay or a flat 2% of pay. The employer may contribute lower than 3% provided they do not go below 1%. The lowered limit cannot be kept for more than two out of five years.

It is also necessary for employers to give their employees reasonable notice ahead of the 60-day election period in instances where the employer needs to change the match amount.

### **Catch-up Contribution Limit**

Employees 50 years or older can make catch-up contributions of up to $3,500 for a total contribution limit of $19,000 in 2023. This was an increase from 2022’s catch-up contribution of $3,000 for a total contribution limit of $17,000.

![SIMPLE_IRA_Contribution_Limits_for_2023](https://www.carboncollectiveinvesting.com/hs-fs/hubfs/SIMPLE_IRA_Contribution_Limits_for_2023.png?width=960&height=541&name=SIMPLE_IRA_Contribution_Limits_for_2023.png)

## **SIMPLE IRA Contribution Deadlines 2023**

New SIMPLE IRAs should be established by October 1 for them to be effective for that tax year.

Employees' elective deferral contributions should be deposited into their SIMPLE IRAs as soon after receipt of pay as reasonably possible, but no later than 30 days after the end of the month they were withheld.

For Tax Year 2022, the employees contribution deadline is December 31, 2022. For employers, this deadline is set on April 15, 2023. For Tax Year 2023, the deadines are December 31, 2023 (for employees) and April 15, 2024 (for employers.

## **Final Thoughts**

The SIMPLE IRA can be a great retirement savings option for small business employees and employers. It has high contribution limits, and employer-matching contributions are required. This makes it easier for employees to save for retirement.

Because SIMPLE IRA employer match contributions are deductible as a business expense, it can also help lower the business's overall tax liability.

If you are a small business owner, talk to your [financial advisor](https://www.carboncollectiveinvesting.com/sustainable-investing/8-different-titles-of-financial-advisors-their-specialties) about whether a SIMPLE IRA is right for you and your employees.

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## **FAQs**

### **1. What are the benefits of a SIMPLE IRA?**

The main benefit of a SIMPLE IRA is that it is a retirement savings plan that is easy to set up and administer. It also has high contribution limits compared to traditional and Roth IRAs. Employer matching contributions are also required, which can help employees save for retirement.

### **2. What are the drawbacks of a SIMPLE IRA?**

Business owners will not be able to save as much for retirement with a SIMPLE IRA over other retirement savings options, such as a 401(k).

Also, unlike a 401(k), SIMPLE IRAs cannot be rolled over immediately into a traditional IRA. A two-year waiting period from when the employee first joined the plan must be met before the account can be rolled over.

### **3. How much can I contribute to a SIMPLE IRA in 2023?**

The contribution limit for SIMPLE IRAs is $15,500 for 2023. This was $14,000 in 2022. Employees 50 years or older can make catch-up contributions of up to $3,500 for a total contribution limit of $19,000 in 2023. For 2022, the catch-up contribution is $3,000 for a total contribution limit of $17,000.

### **4. Why are there contribution limits to IRAs?**

Contribution limits are set in place to prevent high-income earners from saving too much for retirement and getting an unfair tax advantage. The limits ensure that tax benefits will serve as incentives rather than windfalls for those in higher tax brackets.

### **5. What are the investment options available for a SIMPLE IRA?**

The investment options available in a SIMPLE IRA will depend on the financial institution where the account is held. However, common investment options include mutual funds, stocks, and [bonds](https://www.carboncollectiveinvesting.com/sustainable-investing/bond).

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