Simple IRA Contribution Limits: 2024 Limits & Guidelines

Understanding simple IRA contribution limits can help you avoid making any mistakes with this type of retirement account. Here are the basics of simple IRA contribution limits and how they work.

Simple IRA Employee Contributions

Employees are allowed to defer part of their salary into this type of account. As of 2010, you can contribute as much as $11,500 per year into a simple IRA. Each year, the government decides whether to increase the amount based on cost of living increases.

Employer Match

In addition to individual contributions by employees, employers can also contribute money to their employees accounts. This provides them with a nice tax deduction as well. Employers have two different options when it comes to making contributions. They can choose to use a dollar for dollar matching system for employees that contribute to their own accounts. With this system, the employers can only go up to a maximum of 3% of the employees income.

The other option is for the employer to provide a 2% non-elective contribution to every account. This will allow money to go to individuals that do not defer any of their salary to the program. There is also a dollar limit of $245,000 if a company chooses to use non-elective contributions.