Saving with a SIMPLE IRA

A SIMPLE IRA lets you save and invest for the future with tax advantages you can’t get from regular savings and investment accounts. It offers the benefits of an IRA, but with employer contributions and higher contribution limits.
 

A SIMPLE IRA is an important employee benefit. It combines many features of employer-sponsored 401(k) or 403(b) retirement plans with those of a traditional or Roth IRA—while offering some of its own.

• Convenience: Once you’re enrolled in your SIMPLE IRA, contributions are deducted from your paycheck—it’s automatic. Some employers may enroll you automatically and deduct a fixed percentage or amount from your paycheck. You can, however, choose not to contribute or to contribute a different amount.

• Employer contributions: With a SIMPLE IRA employers are required to provide either an automatic contribution or a matching contribution. If a matching contribution is offered, consider saving at least enough to get the full match.

• Tax advantages: You can choose a traditional SIMPLE IRA for pretax contributions or, if offered by the employer, a Roth SIMPLE IRA for after-tax contributions, or both. Each has unique benefits (see next section).

• Growth potential: A SIMPLE IRA gives you the opportunity to invest your account for growth potential. It allows you to take advantage of the power of compounding, which may increase your account balance through the potential for earnings on your earnings.

• Wide-ranging investment selections: Just like traditional and Roth IRAs, SIMPLE IRAs offer a broad variety of investment options for those who want the freedom to invest as they like. SIMPLE IRAs also offer “do it for me” options like target date funds to make investing easier.*

• Portability: If you leave your employer, you can generally move your funds to another employer-sponsored retirement plan that accepts rollovers or to another IRA.

• Support: With your SIMPLE IRA, you’ll have access to Corebridge’s planning and learning resources to help you take action for your future. This includes one-on-one help from a Corebridge financial professional.
   

A SIMPLE IRA may allow two types of contributions: traditional SIMPLE IRA contributions (pretax), Roth SIMPLE IRA contributions (after-tax), if offered by your employer, or both. Consult with a tax advisor for assistance.

Traditional SIMPLE IRA pretax contributions (taxes later)

With the pretax option, contributions are made before taxes are calculated and are deducted dollar for dollar from your taxable income in the year they are made. That means potentially lower annual taxes while you’re saving. Contributions and earnings are taxed when withdrawn. Funds withdrawn prior to age 59½ may be taxable and subject to an additional 10% tax penalty (25% if you’ve participated for less than two years).

When to consider this option

• You are in a higher tax bracket now than you expect to be in retirement.

• You want to reduce your current taxable income.

Roth SIMPLE IRA after-tax contributions (taxes now)

With this option, contributions are made after taxes are calculated and are therefore not deducted from your taxable income in the year they are made. Contributions are tax free when withdrawn, and any earnings can be withdrawn tax free as long as (1) it’s been at least five years from the beginning of the first year in which a Roth contribution was made and (2) you’re at least 59½, you’re disabled, or the payment is made after your death to your beneficiary. Otherwise, distributed earnings may be taxable and subject to an additional 10% tax penalty (25% if you’ve participated for less than two years).

When to consider this option

• You are in a lower tax bracket now than you are likely to be in later, including in retirement.

• You cannot contribute to a Roth IRA due to the income limits.

• You want tax diversity and flexibility in retirement, with a mix of taxable and tax-free income sources.
   

Contributing any amount in a SIMPLE IRA may make a difference for your future. If you’re able, consider saving to the limit for the maximum benefit. You can change your contribution amount at any time.

Eligibility

You are generally eligible to contribute to a SIMPLE IRA if you’ve earned at least $5,000 during any two previous calendar years and expect to earn at least that much in the current calendar year from your employer. However, some employers may allow participation with lower or no restrictions. Check with your employer for details.

Annual limits

Generally, you may contribute as much as 100% of your annual earned income (total taxable compensation) up to the annual contribution limits set by the IRS. SIMPLE IRA contributions count toward the annual individual deferral limits for all employer-sponsored retirement plans combined, including 401(k), 403(b) and SARSEP plans. SIMPLE IRA contribution limits are, however, separate from the limits for other types of IRAs, allowing maximum contributions to both types.

The 2026 contribution limit for a SIMPLE IRA is $17,000. However, if your employer has 25 or fewer employees, you may contribute up to $18,100. If you participate in another type of employer-sponsored retirement plan, such as a 403(b) or 401(k), the most you can contribute to all plans together is $24,500 for 2026. If your employer has 26 to 100 employees, they may allow the higher contribution limits if they contribute the required additional employer contribution. Check with your employer for details.

Catch-up contributions

If you’re saving the maximum, you can save even more in your SIMPLE IRA with catch-up contributions starting in the year you turn 50 and “super” catch-up contributions from age 60 to 63. A Corebridge financial professional can help calculate your annual contribution limits.

The 2026 catch-up contribution limit for those who are age 50 to 59 and 64+ is $4,000 ($21,000 total contribution). The super catch-up contribution for those who are age 60 to 63 is $5,250 ($22,250 total contribution). If you participate in another type of employer-sponsored retirement plan, such as a 403(b) or 401(k), the most you can contribute to all plans together is $32,500 for age 50 to 59 and 64+ and $35,750 for age 60 to 63 for 2026.

If your employer has 25 or fewer employees, the catch-up contribution limit for those who are age 50 to 59 and 64+ is $3,850 ($21,950 total contribution). The super catch-up contribution for those who are age 60 to 63 remains the same at $5,250 ($23,350 total contribution). If your employer has 26 to 100 employees, they may allow the higher contribution limits if they contribute the required additional employer contribution. Check with your employer for details.
 

While SIMPLE IRAs are intended to help you save for retirement, there may be cases where you need access to your money sooner. Withdrawals are permitted at any time, but they may be subject to taxes and a tax penalty. The following rules apply to withdrawals on all pretax amounts and on the earnings only for Roth after-tax contributions.

Withdrawals subject to tax (no tax penalty)

• Withdrawals at any age for disability, first-time home purchase (up to $10,000), qualified higher education expenses and health insurance premiums if unemployed, among others

• Any withdrawals once you turn age 59½

• Death

Withdrawals subject to tax (plus 10% tax penalty or 25% if you’ve participated for less than two years)

• Any withdrawals prior to age 59½ that do not qualify for an exception (such as those listed above)

No loans are available
 

Ready to make the most of your SIMPLE IRA? Enroll and start contributing today.

For specific questions regarding your situation, speak with a tax professional or contact your Corebridge financial professional. Reach out to us if you don’t have an assigned financial advisor.
 

*The principal value of an investment in a target date fund is not guaranteed at any time including at or after the target maturity date. The target date is the approximate date when investors plan to start withdrawing their money. The fund will gradually shift its emphasis from more aggressive investments to more conservative ones based on its target date. Remember all investment involves risk, including possible loss of principal.

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