Can you contribute to two SIMPLE IRA plans with two jobs? Well, if there's no relationship between your employers—the only link is that you, the employee, work for both of them—then yes, you can make salary deferral contributions to both SIMPLE IRA plans. And this is true for more than two companies, too. In fact, the number of companies doesn't matter, as long as they are disassociated. You could theoretically, for example, contribute to four different SIMPLE (Savings Incentive Match Plan for Employees) IRAs (Individual Retirement Accounts) at four different companies, as long as your contributions do not exceed a maximum amount. What's that maximum amount? Read on.
Key Takeaways
- You can contribute to more than one SIMPLE IRA plan, as long as your employers aren't connected in any way.
- Your maximum contribution depends on your age and the tax year.
Maximum Contributions
For people age 50 and older, the maximum contribution for one or more SIMPLE IRAs is $22,500 for 2023, and $23,000 for 2024. These numbers include up to $3,500 in "catch-up" contributions, an option that is only open to those over 50. (The catch-up contribution limit is $3,500 for both 2023 and 2024.)
No more than $15,500 may be contributed to a single SIMPLE IRA for 2023; for 2024, it's $16,000.
The limit is lower for those younger than 50, who do not have access to catch-up contributions. An individual under 50 can defer no more than $15,500 for 2023 and no more than $16,000 for 2024, regardless of the number of plans they participate in.
On the other hand, if the companies you work for are affiliated or related in any way—if there is any one party that has ownership of both companies, whether in part or 100% ownership, or if there is any relationship that would constitute an affiliated service group, for example—then the maximum amount that you can defer across multiple SIMPLE IRAs may be limited to $15,500 in 2023 and $16,000 in 2024.
What Is a SIMPLE IRA?
A SIMPLE IRA is a tax-advantaged account for retirement that is designed to be what its name suggests: simple to set up and use. It's limited to employers that have no more than 100 employees, including self-employed people and sole-proprietors.
Every year, employers must choose either a mandatory contribution equal to 2% of the employee's compensation—regardless of whether the employee contributes to the plan that year—or a 3% match of the employee's compensation. The employer decides which route to take on an annual basis, and lets the employees know.
Employers get a tax deduction for their contributions, as well as a $500 tax credit for three years, thanks to the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019.
A SIMPLE IRA does come with some disadvantages, such as a lower contribution limit compared to a 401(k). And there is a two-year waiting period for rolling over funds from a SIMPLE IRA to other plans.
Does Contributing to a SIMPLE IRA Reduce Taxable Income?
Yes, like with a traditional IRA or 401(k), making a contribution to a SIMPLE IRA lowers your taxable income. You get the tax deduction up front, and then must pay taxes on the withdrawals (distributions) in retirement. With a Roth IRA, on the other hand, distributions in retirement are tax-free because you pay taxes on your contributions the year you make them.
59 ½
Age 59 ½ is the earliest you can withdraw money from your SIMPLE IRA without penalty. Any earlier, and you'll need to pay a 10% penalty to the Internal Revenue Service (IRS). And if you withdraw funds in the first two years of opening the plan, it's a 25% penalty.
Does the Employer Match Count Towards the SIMPLE IRA Limit?
No, your employer's contributions—whether it's the 2% non-elective contribution or 3% match—do not count towards the limit that you may contribute to your SIMPLE IRA. This is similar to other employer-sponsored plans, such as the 401(k).
Does the Employer Have to Match 3% for a SIMPLE IRA?
No, not always. An employer may elect to reduce the 3% match to no less than a 1% match, but this move must be temporary: the lower match must not continue for longer than "2 calendar years out of the 5-year period ending with the calendar year the reduction is effective," according to the IRS.
The Bottom Line
You can contribute to multiple retirement plans if you work more than one job, depending on what your employers offer. This may be the same type of plan, such as two SIMPLE IRAs, or different options, such as a 401(k) and a SIMPLE IRA. If you work for more than one employer, and your employers aren't related to each other in any way, then it's possible for you to contribute to more than one SIMPLE IRA at one time. Just be mindful of the annual contribution limits.
FAQs
Can you contribute to two SIMPLE IRA plans with two jobs? Well, if there's no relationship between your employers—the only link is that you, the employee, work for both of them—then yes, you can make salary deferral contributions to both SIMPLE IRA plans. And this is true for more than two companies, too.
What are the rules for SIMPLE IRA contributions? ›
What are the contribution rules? 3% matching contribution - match of employee's elective deferrals on a dollar-for-dollar basis up to 3% of the employee's compensation. May reduce the 3% limit to a lower percentage, but in any event, not lower than 1%.
Can you combine two SIMPLE IRA accounts? ›
A transfer may occur between two Traditional IRAs (including those with SEP plan contributions), two Roth IRAs, two SIMPLE IRAs, and between a SIMPLE IRA* and a Traditional IRA. The IRS does not place restrictions on when or how often you can transfer IRA assets.
Can an employer contribute more than 3 to a SIMPLE IRA? ›
The employer is generally required to match each employee's salary reduction contributions on a dollar-for-dollar basis up to 3% of the employee's compensation. This requirement does not apply if the employer makes nonelective contributions instead.
Can you contribute to 2 IRA accounts? ›
There is no limit to the number of traditional individual retirement accounts, or IRAs, that you can establish. However, if you establish multiple IRAs, you cannot contribute more than the contribution limits across all your accounts in a given year.
How many employees can you have in a SIMPLE IRA? ›
Any employer (including self-employed individuals, tax-exempt organizations and governmental entities) that had no more than 100 employees with $5,000 or more in compensation during the preceding calendar year (the "100-employee limitation") can establish a SIMPLE IRA plan.
What are the disadvantages of a SIMPLE IRA? ›
Are There Downsides to SIMPLE IRAs and SEPs?
- Employee limitations. SIMPLE IRAs can only be implemented at companies with 100 or fewer employees. ...
- Total annual contribution limits. ...
- Lower contribution limits than a 401(k). ...
- Mandatory employer contributions. ...
- No loans or Roth contributions.
If you work for more than one employer, and your employers aren't related to each other in any way, then it's possible for you to contribute to more than one SIMPLE IRA at one time. Just be mindful of the annual contribution limits.
What is the 2 year rule for SIMPLE IRAs? ›
After the 2-year period, you can make tax-free rollovers from SIMPLE IRAs to other types of non-Roth IRAs, or to an employer-sponsored retirement plan. You can also roll over money into a Roth IRA after the 2-year period, but must include any untaxed money rolled over in your income.
What happens to my SIMPLE IRA when I change jobs? ›
You can leave it where it is, at its current financial institution. You can roll it over to another SIMPLE IRA before two years have elapsed with no penalty. Or you can wait two years after the account was opened, and then move the funds to another account via a rollover or Roth conversion.
Employer contributions to your SIMPLE IRA may be made in periodic contributions or in a single lump sum, as long as the contributions are deposited before the employer's tax return filing deadline (including extensions). May I stop contributing to my SIMPLE IRA? Yes.
What are the changes to the SIMPLE IRA for 2024? ›
For 2024, the employee salary deferral limit is $16,000, plus an additional $3,500 catch-up contribution (for those participants age 50+). These rules were both straightforward and simple. Then came SECURE Act 2.0, whereby an employer could allow for increased employee deferrals and/or employer contributions.
How long does an employer have to deposit SIMPLE IRA contributions? ›
Depositing and Investing Plan Contributions
You (or the trustee) must deposit employee contributions in the financial institution serving as trustee for the plan as soon as reasonably possible, but no later than 30 days after the end of the month in which the amounts would otherwise have been payable to the employee.
Can two IRAs be combined? ›
Easier account management.
If you've racked up several 401(k)s from jobs or have more than a couple IRAs, keeping track of them might be overwhelming. Combining accounts can simplify your finances and provide a clear picture of what you have saved.
Should I split my IRA into two accounts? ›
Landsberg says investing in multiple IRAs is also something to consider if you'd like to have different beneficiaries for your retirement accounts. You may want to earmark funds in one IRA for your spouse, then set up additional IRAs that each of your children could inherit.
Can I contribute to a SIMPLE IRA and a traditional IRA? ›
Yes, you can contribute to a traditional and/or Roth IRA even if you participate in an employer-sponsored retirement plan (including a SEP or SIMPLE IRA plan).
What is the maximum contribution to a SIMPLE IRA over 50? ›
For 2024, the annual contribution limit for SIMPLE IRAs is $16,000, up from $15,500 in 2023. Workers age 50 or older can make additional catch-up contributions of $3,500, for a total of $19,500.
How much can a self-employed person contribute to a SIMPLE IRA? ›
You may defer up to $16,000 in 2024, $15,500 in 2023, $14,000 in 2022, $13,500 in 2021 and in 2020 and $13,000 in 2019 (adjusted cost-of-living in later years). However, you may not exceed your net earnings from self-employment from the business sponsoring the SIMPLE IRA plan.
What are the SIMPLE IRA rules for 2024? ›
For 2024, the employee salary deferral limit is $16,000, plus an additional $3,500 catch-up contribution (for those participants age 50+). These rules were both straightforward and simple. Then came SECURE Act 2.0, whereby an employer could allow for increased employee deferrals and/or employer contributions.
