SIMPLE IRA Contribution Limits 2015

What Is the Maximum You Can Save in a SIMPLE IRA in 2015

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There's good news for small business owners and employees who invest for retirement through a SIMPLE IRA. The amount you can contribute in 2015 is on the rise. Find out how much you can invest in your savings incentive match plan in this tax year.

Looking for prior year limits?

SIMPLE IRA limits 2014
SIMPLE IRA limits 2013
SIMPLE IRA limits 2012

2015 SIMPLE IRA Contribution Limits

Every few years, the amount you can contribute to a SIMPLE IRA increases with the cost of living.

In 2014, the limits stayed at $12,000, but in 2015 the limit on the amount employees or business owners can contribute to a SIMPLE is $12,500. Your own contribution limits may vary according to company policy. If you are age 50 or older, you may also be eligible for a catch-up contribution. The limit on catch-up contributions is up as well in 2015, to $3,000 from $2,500 in 2014. Even if you put money away in another type of retirement plan, such as a 401(k), you can still contribute to a SIMPLE. However, in 2015, the combined total you may contribute cannot exceed $18,000. 

SIMPLE IRA Differences 

There are some quirks that make SIMPLE IRAs different from other types of self-employed and small business retirement plan options. Let's start with how they are alike. Contributions are made pre-tax, and taken out of your salary. The assets can be invested in the way that you choose. The assets grow tax-deferred until the money is distributed at retirement, which happens at age 59 1/2 or before 70 1/2.

Take your money out of a SIMPLE IRA before then and you will owe taxes and will likely pay a 10 percent penalty fee. 

Sounds a lot like a 401(k) plan, right? Except for the contribution limits, a SIMPLE IRA is very similar a to 401(k) plan that includes an employer match. If you have a SIMPLE IRA, a match is guaranteed, from 1 percent to 3 percent of salary each year.

Employers can offer only 1 percent, but not for more than two years in a five-year period. In the other years, the match should be higher. In years when it is going to be lowered, employers have to give employees advance notice of the change. 

Instead of going back and forth from 1 percent to 3 percent, employers can make nonelective contributions of 2% across the board. That means that the employer gives you 2 percent of salary each year even if you do no elect to save for retirement. Some employers will limit eligibility for nonelective contributions to employees with SIMPLE IRA balances of at least $5000. The salary limit for these contributions in 2015 is $265,000, up from 2014 is $260,000.

Another difference is in the SIMPLE IRA rollover when an employee changes companies. SIMPLE rollovers are not quite as simple as other types of rollovers. SIMPLE IRAs can only be moved into a rollover IRA if you have been invested in your plan for more than two years, otherwise, you must leave it where it is or find another SIMPLE IRA to move it to. 

Still, the match alone makes a SIMPLE IRA a great place to save. With higher contribution limits offered in 2015, you can save more than ever before.


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