If you participate in a SIMPLE-IRA and are age 50 or older, you can make so-called catch-up contributions that are above and beyond what younger participants can contribute. These catch-up contributions are intended to address the fact that many people aren’t saving enough for retirement. Here’s what you need to know about SIMPLE-IRA catch-up contributions, including some necessary background information.
The Basics
For 2026, you can generally contribute up to the lesser of 1) 100% of your salary or net self-employment income, or 2) $17,000. This is considered an elective deferral contribution made to your SIMPLE-IRA account by you as an employee or self-employed individual.
Then your employer or you (as a self-employed person) can generally make a matching contribution equal to the lesser of 1) 3% of your salary or self-employment income, or 2) the amount of your elective deferral contribution. Alternatively, employers may opt to make a non-elective contribution of 2% of compensation for each eligible employee who has at least $5,000 of annual compensation, regardless of whether the employee makes salary reduction contributions.
Catch-Up Details
For 2026, the standard maximum SIMPLE-IRA catch-up contribution for participants who are age 50 or older as of December 31, 2026, is $4,000. The advantage of making catch-up contributions is that they reduce your taxable salary — or your taxable income if you’re self-employed — while also allowing you to put more into your tax-deferred retirement account. In effect, catch-up contributions are deductible in determining your taxable income.
Some plan rules allow catch-up contributions to be made on a Roth (after-tax) basis. However, Roth catch-up contributions won’t reduce your current taxable income.
Important: SIMPLE-IRA participants who attain age 60, 61, 62, or 63 in 2026 are eligible for “super” catch-up contributions of $5,250. To be clear, these super catch-up contributions are allowed only if you reach one of those specific ages this year. If you’re not in that window, the standard $4,000 catch-up contribution maximum applies.
Putting the Pieces Together
Here’s how the pieces fit together, depending on your age:
If you’ll reach age 50 to 59 by the end of 2026. The maximum amount you can contribute to a SIMPLE-IRA is $21,000 ($17,000 plus the $4,000 standard catch-up contribution). +
If you’ll reach age 60 to 63 by the end of 2026. The maximum amount is $22,250 ($17,000 plus the $5,250 super catch-up contribution).
If you’ll reach age 64 or older by the end of 2026. The maximum is $21,000 ($17,000 plus the $4,000 standard catch-up contribution).
Higher Contributions If You Work for an Eligible Employer
Catch-up contributions can make a significant difference in your retirement nest egg. Say you contribute an extra $4,000 starting at age 50 and continuing until age 65 when you retire. If you earn 5% annually on that money, the extra contributions stashed in your SIMPLE-IRA will be worth almost $100,000 when you retire.
If you work for an eligible employer and/or take advantage of super catch-up contributions, you’ll have even more. Plus, you’ll have lowered your annual tax bills along the way.
Can You Also Contribute to a Traditional or Roth IRA?
Contributing to a SIMPLE-IRA doesn’t affect your eligibility to contribute to a traditional or Roth IRA. However, SIMPLE-IRAs are considered employer-sponsored retirement plans. So, the privilege of making deductible contributions to a traditional IRA is subject to a phaseout that applies to participants in tax-favored retirement plans — including SIMPLE-IRAs.
Eligibility to contribute to a Roth IRA is subject to separate income limits. Ask your tax advisor for the details.
Tax-Savvy Move
The catch-up contribution privilege is a tax-savvy move for those with enough cash flow to take advantage. You can lower your tax bill and stash more money in a tax-deferred retirement account. If you have questions or want more information about SIMPLE-IRA catch-up contributions, or this type of retirement plan in general, contact your tax advisor.