A SIMPLE IRA is built for small employers — a required match keeps the employer contribution simple, but that same match is capped by compensation, not by the employee’s own deferral.
How it works
The employer match is the smaller of the employee’s deferral or the match rate applied to compensation — typically a dollar-for-dollar match up to 3% of pay. Total contribution room is the deferral plus that match.
What this does not include
An employer can instead choose a flat 2% nonelective contribution for every eligible employee regardless of whether they defer anything — a different funding structure this calculator’s match-based computation doesn’t cover.
How to use this calculator
- Enter the employee deferral and annual compensation.
- Enter the employer’s match rate.
Frequently asked questions
Can the employer reduce the match below 3%?
Yes — down to as low as 1%, but only in 2 of any 5 years, per IRS rules; it can’t be permanently reduced without switching plan types.
How does SIMPLE IRA compare to a 401(k)?
Lower administrative cost and complexity for the employer, but a lower employee deferral limit than a 401(k) — a tradeoff many small businesses accept for simplicity.
Can employees also have an IRA on the side?
Yes, subject to the usual IRA contribution limits and any deduction phase-outs that apply when covered by a workplace plan.
