SIMPLE IRA Contribution Limits for 2022 and 2023

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The 401(k) isn’t the only employer-sponsored retirement account around. SIMPLE IRAs may be an option for employees of smaller companies and the self-employed who want tax-advantaged savings for their futures.
SIMPLE IRA contribution limits
The annual SIMPLE IRA contribution limits in 2022 are:
Under age 50: $14,000.
Age 50 and older: $17,000.
The annual SIMPLE IRA contribution limits in 2023 are:
Under age 50: $15,500
Age 50 and older: $19,000.
These contribution limits are lower than those for a 401(k). But people with a SIMPLE IRA may take part in another employer-sponsored plan (say, if a person had more than one job) and make contributions up to a total of $20,500 in 2022 and $22,500 in 2023.
What's more, while employers are not required to match employee contributions to a 401(k), generally they must kick in on a SIMPLE IRA, either matching contributions of up to 3% of employee compensation, or fixed contributions of 2% to every eligible employee. (The "SIMPLE" stands for "Savings Incentive Match Plan for Employees.")
Aside from the different contribution limits — and the fact that SIMPLE IRAs are available only at companies with fewer than 100 employees — the two work similarly. Just as a 401(k) does, a SIMPLE IRA allows investors to defer taxes on contributions and investment growth until the cash is used in retirement.
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Other important notes for a SIMPLE IRA:
Rollover period: Participants in a SIMPLE IRA can roll their cash into a traditional IRA two years after first contributions to the account
Big penalty for early withdrawal: As with many tax-advantaged accounts, you face a 10% penalty on top of regular income taxes for withdrawing before age 59½. But for SIMPLE IRA withdrawals within the first two years, that tax penalty is increased to 25%. Other withdrawal rules are similar to those for traditional IRAs.
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