The Crazy-Complicated 2026 SIMPLE IRA Plan Elective Deferral Limits
Since 2002, SIMPLE IRA plans have allowed employees who reach age 50 or older by the end of the year to make “catch-up contributions” beyond the usual elective deferral limit.
Beginning in 2024, Congress automatically increased the regular and catch-up contribution limits for smaller (25 employees or fewer) SIMPLE IRA plans. These higher deferral limits were intended to make small-business retirement benefits more competitive with the benefits offered by larger employers. The same higher limits were also available for larger (26-100 employees) plans, but only if the employer makes a higher-than-usual company contribution. (If the employer matches deferrals, the match must go up to 4% of pay instead of the usual 3% of pay. If the employer contributes to all eligible employees, the contribution must go up to 3% of pay instead of the usual 2%.)
Starting in 2025, Congress raised the catch-up limit even higher for participants aged 60-63 by allowing “super catch-up contributions” to SIMPLE IRA plans.
Although well-intentioned, these changes have caused the SIMPLE IRA plan deferral limits to become far too complicated. Depending on your age, the size of your company and (in the case of larger businesses), the amount of your company’s contribution, you are subject to one of six SIMPLE IRA deferral limits, including one of three catch-up limits. On November 13, 2025, the IRS announced the 2026 COLA limits for IRAs and retirement plans.
The 2026 limits for SIMPLE IRAs
1) If you’re under age 50 on December 31, 2026, and your company has 25 or fewer employees, your deferral limit is $18,100. The same limit applies if you’re under age 50 on December 31, 2026, your company has more than 25 employees, and it makes the increased company contribution.
2) If you’re under age 50 on December 31, 2026, your company has more than 25 employees, and it doesn’t make the increased company contribution, your deferral limit is $17,000.
3) If you’re between ages 50 and 59 OR age 64 or older on December 31, 2026, and your company has 25 or fewer employees, your total deferral limit is $21,950 (including $18,100 of regular deferrals and $3,850 of catch-ups). The same limits apply if you’re between ages 50 and 59 OR age 64 or older on December 31, 2026, your company has more than 25 employees, and it makes the higher-than-usual company contribution.
4) If you’re between ages 50 and 59 OR age 64 or older on December 31, 2026, your company has more than 25 employees and it doesn’t make the increased company contribution, your total deferral maximum is $21,000 (including $17,000 of regular deferrals and $4,000 of catch-ups).
5) You will notice that the 2026 age-50-and-older catch-up limit for smaller employers (and larger employers who make the higher company contribution) – $3,850 – is lower than the $4,000 age-50-and-older catch-up limit for other larger employers. This was clearly not intended by Congress and results from a quirk in the tax code as to how COLAs are applied to various deferral limits. Hopefully, Congress will fix this for future years.
6) If you’re between ages 60 and 63 on December 31, 2026 and your plan allows it, you can defer up to a total of either $23,350 or $22,250 (including regular deferrals up to $18,100 or $17,000,and $5,250 of super catch-ups).
By Ian Berger, JD
IRA Analyst
Ed Slott and Company, LLC
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