Project SIMPLE IRA retirement balance with employee deferral and mandatory employer match.
Projected balance
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Annual employer match
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Total contributions
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The retirement plan built for small shops
A SIMPLE IRA (Savings Incentive Match Plan for Employees) is the retirement account a business with 100 or fewer employees reaches for when a full 401(k) is too expensive and too much paperwork. The trade-off is right in the name. It is genuinely simple to run, with no annual Form 5500 filing and no discrimination testing, but the contribution ceiling is lower than a 401(k). For 2026 the employee deferral cap used by this calculator is $16,500. The headline feature, and the reason employees love it, is that the employer contribution is mandatory, not optional.
Two ways the employer must pay in
An employer running a SIMPLE IRA must choose one of two formulas each year. The first is a dollar-for-dollar match of up to 3% of the employee's pay, which only costs the employer money when the employee actually contributes. The second is a 2% non-elective contribution to every eligible employee whether they defer a dime or not. This tool models the match path, which is the far more common choice. The match is calculated on your salary, so the more you earn, the larger the free money your employer is required to add.
A $75,000 earner over a 25-year career
Suppose you make $75,000, contribute $10,000 a year, get the standard 3% match, and earn a 7% annual return over 25 years. The 3% match on $75,000 is $2,250 a year, so your total annual contribution is $12,250. The calculator deposits that amount and then grows the balance, repeating every year (an annuity-due pattern, which is why the projected balance runs high). Over 25 years your own deposits plus the match total $306,250, and compounding lifts the ending balance to roughly $829,000.
| Figure | Amount |
|---|---|
| Your annual deferral | $10,000 |
| Employer match (3% of $75,000) | $2,250 |
| Combined annual contribution | $12,250 |
| Total contributed over 25 years | $306,250 |
| Growth from 7% compounding | about $522,000 |
| Projected balance at year 25 | about $829,000 |
Notice that growth alone nearly doubles what you put in. The chart traces how contributions and investment gains separate over the years.
A trap that costs people thousands
The most expensive mistake with a SIMPLE IRA is the two-year rule. If you roll money out of a SIMPLE IRA into another plan within two years of your first contribution, and it is not going into another SIMPLE, the early-distribution penalty jumps from the usual 10% to a brutal 25%. People who change jobs and rush to consolidate accounts walk straight into this. Wait out the two-year window and the penalty drops back to normal. One more planning note: this calculator caps your deferral at $16,500 and does not add the age-50 catch-up to that cap in its math, so if you are 50 or older, your real ceiling is higher than what the tool will let the deferral grow to.
Questions employees ask
Can I have a SIMPLE IRA and a Roth IRA in the same year?
Yes. The SIMPLE IRA is an employer plan and the Roth IRA is a personal account with its own separate contribution limit. You can fund both in the same year, subject to the Roth income phase-out rules. Doing so is a smart way to build both pre-tax and tax-free buckets at once.
Is my employer match vested immediately?
Yes, and this is a real advantage over many 401(k) plans. All SIMPLE IRA contributions, both yours and your employer's, are 100% vested the moment they are deposited. There is no vesting schedule to wait out, so if you leave the company the match is fully yours.
A few practical notes round out the picture for the small-business owner deciding whether a SIMPLE IRA fits. Because the plan demands a mandatory employer contribution every year there are eligible employees, it works best for a stable, profitable small business rather than one with lumpy cash flow, since you cannot simply skip the match in a lean year the way a discretionary profit-sharing plan would let you. The contribution deadlines are also worth circling: employee deferrals must be deposited promptly after each payroll, while the employer match can be funded up to the business tax filing deadline including extensions. This calculator is aimed squarely at the employee or owner trying to see what a steady deferral, the required match, and a few decades of compounding actually add up to. Treat the projected balance as a planning estimate rather than a promise, because real returns are uneven year to year, and the longer your horizon, the more the ending figure swings with the return assumption you choose.