What Is a SIMPLE IRA? Retirement Plan Rules, & FAQs

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What Is a SIMPLE IRA? Retirement Plan Rules, & FAQs

Throughout your journey of finding ways to save for retirement and plan for your future, you will come across many options for IRAs. Depending on your financial situation, goals for the future, age, and many more factors, the right IRA for you may be different than the next person. One of the options for an IRA account is called a SIMPLE IRA. Keep reading to learn more about what a SIMPLE IRA is, retirement plan rules, and other frequently asked questions.


According to the IRS, a SIMPLE IRA plan (Savings Incentive Match PLan for Employees) allows employees and employers to contribute to traditional IRAs set up for employees. It is ideally suited as a start-up retirement savings plan for small employers not currently sponsoring a retirement plan. SIMPLE IRA plans can provide a significant source of income at retirement by allowing employers and employees to set aside money in retirement accounts. SIMPLE IRA plans do not have the start-up and operating costs of a conventional retirement plan.

Pros and Cons of a SIMPLE IRA include::

  • Easy and inexpensive to set up and operate
  • Employees share responsibility for their retirement
  • No discrimination testing required
  • Inflexible contributions
  • Lower contribution limits than some other retirement plans
  • Who Contributes: Employer must contribute and employee may contribute.
  • Contribution Limits: Total contributions to each employee’s SIMPLE IRA are limited.
  • Filing Requirements: An employer generally has no filing requirements.
  • Participant Loans: Not permitted. The assets may not be used as collateral.
  • In-Service Withdrawals: Yes, but includible in income and subject to a 10% additional tax if under age 59-1/2. Also, if withdrawals are made within the first two years of participation, the 10% additional tax is increased to 25%.

What Are The Contribution Rules?

Also according to the IRS, SIMPLE IRAs hold the contributions made for each eligible employee. A SIMPLE IRA is funded by:

  • For 2022, annual employee salary reduction contributions (elective deferrals)
    • Limited to $14,000*
    • For employees age 50 or over, a $3,000 “catch-up” contributions is also allowed*
  • For 2020 and for 2021, annual employee salary reduction contributions (elective deferrals)
    limited to $13,500*

    • For employees age 50 or over, a $3,000 “catch-up” contribution is also allowed*
  • For 2019, annual employee salary reduction contributions (elective deferrals)
    limited to $13,000*

    • For employees age 50 or over, a $3,000 “catch-up” contribution is also allowed*
  • Employer contributions. The employer must annually choose one of the contribution methods below. The employer must tell employees during the election period which method will be used for the following year:
    • 2% nonelective contribution – 2% of each eligible employee’s compensation regardless of whether or how much the employee deferred, or
    • 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%. May not lower the 3% limit for more than 2 calendar years out of the 5-year period ending with the calendar year the reduction is effective.
    • The employer cannot make any other contributions to a SIMPLE IRA plan.

Precious Metals IRA

Gold and silver are two of the world’s most desired commodities and are the only assets that are universally accepted standards of payment. Gold and silver also allow their owners to acquire currency anywhere in the world, making these metals versatile regardless of location. It is also one of the ways you can save for retirement, via a Precious Metals IRA.

One of the drawbacks of a SIMPLE IRA is that there is no option to have a Roth version of your SIMPLE IRA. This means that you cannot fund your account with post-tax money. This means you will have to pay taxes when you withdraw the money. One of the ways you can have an IRA with Roth benefits is a Precious Metals IRA.

By rolling over your IRA, 401(k), 403, TSP, or 457 Plan into our Precious Metal IRA Account, you can achieve the same profits that you would gain by purchasing gold or silver directly, while also enjoying the benefits that your retirement account provides. We have a proven four-step process that makes it easy to open a precious metals IRA, and we guarantee you the highest caliber customer service. Our IRA specialists will answer all of your questions, work with your current custodians to ensure a seamless transition, provide you a free metal evaluation, and continually help you to review your portfolio.

Choosing IRA Options with Priority Gold

If you are ready to invest in gold to protect your savings and secure your future, we can help. Priority Gold is one of the most trusted precious metals dealers in the United States with BBB A+ Rating, AAA Rating with Business Consumer Alliance, and 5 Stars Rating with TrustLink. We specialize in providing precious metals investment services with Security, Liability, and Great Convenience for customers.

Our team is committed to helping to streamline their precious metals purchases at a fair price, selecting the right precious metals portfolios, and meeting their important financial objectives. We offer Free Storage for qualifying Gold & Silver IRA accounts, a fast & easy gold buying process, and smooth IRA Transfer. Priority Gold guarantees the highest standards of customer service, which comes with honesty, professional conduct, and Ethical Code of Business.

For more information, visit us at prioritygold.com

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