SIMPLE IRA Calculator: Project a Small-Business Retirement Balance
Project how a SIMPLE IRA could grow — the retirement plan small employers (typically under 100 employees) use to match their team's contributions without the complexity of a 401(k).
Adjust the inputs and select Calculate for a full breakdown.
Year-by-year growth schedule
Compare Common Scenarios
How the numbers shift across typical situations for this calculator:
| Scenario | Future value | Total contributions | Total interest earned |
|---|---|---|---|
| $15k · $500/mo · 7% · 20yr | $321,044.41 | $135,000.00 | $186,044.41 |
| $0 · $300/mo · 8% · 25yr | $285,307.92 | $90,000.00 | $195,307.92 |
| $50k · $800/mo · 6% · 15yr | $355,359.65 | $194,000.00 | $161,359.65 |
| $5k · $250/mo · 7% · 30yr | $345,575.24 | $95,000.00 | $250,575.24 |
How This Calculator Works
Enter the current SIMPLE IRA balance, the expected annual return, the years until retirement, and the monthly contribution combining your deferral and the employer match. The calculator compounds monthly and shows the projected balance plus the share built by investment growth.
The Formula
Future Value with Regular Contributions
P = starting amount, PMT = monthly contribution, r = monthly rate (annual ÷ 12), n = number of months
Worked Example
With $15,000 saved, $500 a month added (employee plus match), and a 7% return over 20 years, a SIMPLE IRA reaches about $321,000. Contributions account for $135,000; investment growth supplies the remaining $186,000.
Key Insight
The SIMPLE IRA's defining feature is the employer match — typically 3% of pay, dollar-for-dollar on what the employee contributes. Skipping the match leaves free money behind, which is why the headline 'savings rate' of a SIMPLE IRA participant is usually their own deferral plus the matched 3% they get for showing up to contribute.
SIMPLE IRA vs SEP IRA vs 401(k) for small business
Small business retirement plan landscape. SIMPLE IRA: $16K limit, mandatory employer match, simple administration, no annual 5500 filing for small plans. Best for: 10-99 employee businesses wanting moderate plan with employer match.
SEP IRA: 25% compensation/$69K cap, no employee elective deferrals, simple. Best for: solo self-employed or 1-3 employee businesses where owner wants maximum contribution.
401(k): $23K + $7.5K catch-up elective + employer match optional + $69K total cap. Most complex; requires plan administration; annual 5500 filing. Best for: 100+ employees or businesses wanting maximum flexibility and contribution limits.
Decision tree: 1-3 employees with high owner income → SEP IRA. 4-50 employees, moderate income → SIMPLE IRA. 50+ employees or owner wanting Roth option → 401(k). The right plan depends on number of employees, income levels, and feature priorities.
SIMPLE IRA matching obligations
Employer match options. (1) DOLLAR-FOR-DOLLAR MATCH up to 3% of compensation. Most attractive to employees who can contribute. Effective cost: 3% of compensation × participation rate. If 80% of employees participate at max, cost = ~2.4% of total payroll.
(2) NON-ELECTIVE 2% CONTRIBUTION for ALL eligible employees regardless of their own contribution. Less attractive to high earners (can't get more than 2%) but guaranteed cost regardless of employee participation. Effective cost: 2% of total eligible payroll.
For employees: 3% match more valuable than 2% non-elective when fully utilized. Maximum match $1,500 on $50K salary (3% match) vs $1,000 non-elective. But 2% guaranteed even without employee contribution.
Strategic match selection: businesses with high-employee-engagement and willingness to contribute should use 3% match; businesses with lower engagement or simpler administration preference should use 2% non-elective.
SIMPLE IRA features summary
Reference key features of SIMPLE IRA plan.
| Feature | Specification | Notes |
|---|---|---|
| 2024 employee contribution limit | $16,000 | Same for traditional/Roth |
| Catch-up 50+ | $3,500 | Plus standard limit |
| Employer match | 3% match OR 2% non-elective | Mandatory |
| Plan setup | Simple; standard IRS form | vs 401(k) custom plan doc |
| Annual reporting | None for most small plans | Saves admin cost |
| Eligible business size | ≤100 employees | If grows beyond, must transition |
| Early withdrawal penalty | 25% if <2 years, then 10% | Higher than other plans first 2 years |
| Roth option | Available (2023 SECURE 2.0) | Recent addition |
SIMPLE IRA's lower contribution limit ($16K vs $23K for 401(k)) and lower employer match (3-4% vs corporate 401(k) often 4-6%) make it less attractive for high earners but suitable for small businesses where 401(k) complexity isn't justified. The 25% early withdrawal penalty for first 2 years is unique disadvantage — discourage 401(k)-style rollovers within first 2 years of plan establishment.
Frequently Asked Questions
What is a SIMPLE IRA?
A retirement plan for small employers — typically under 100 employees — that matches employee contributions. It is simpler to administer than a 401(k) but has lower contribution limits.
How does the employer match work?
Most SIMPLE IRAs match 3% of pay dollar-for-dollar on what the employee contributes. Some use a 2% non-elective contribution paid to all eligible employees regardless of deferral.
How are contributions taxed?
Employee contributions are pre-tax, lowering taxable income now. Growth is untaxed until withdrawal. Withdrawals in retirement are taxed as ordinary income; early withdrawals can trigger extra penalties.
What are the contribution limits?
The employee deferral limit is lower than a 401(k) — check the current IRS figures for the exact dollar amount. Catch-up contributions are allowed for those 50 and older.
SIMPLE IRA or 401(k)?
SIMPLE IRAs are easier and cheaper to administer but have lower limits. 401(k)s allow much higher contributions and richer plan design but cost more to run. Choice depends on company size and contribution targets.
When is this calculator unreliable?
When SIMPLE IRA isn't the optimal plan choice. For solo self-employed or 1-3 employee businesses with high owner income, SEP IRA or Solo 401(k) typically allow much higher contributions. For 100+ employee businesses, 401(k) provides higher limits and flexibility. SIMPLE IRA is optimal in narrow band of 10-99 employee businesses wanting moderate complexity with mandatory employer match.
References & Authoritative Sources
- Internal Revenue Service (IRS) — SIMPLE IRA Plan Information · consulted June 1, 2026 · Federal regulator on SIMPLE IRAs
- U.S. Small Business Administration (SBA) — Small Business Retirement Plans · consulted June 1, 2026 · SBA guidance on small business retirement
- U.S. Department of Labor — EBSA — SIMPLE IRA Plan Resources · consulted June 1, 2026 · Federal employee benefits regulator
Related Calculators
Data Sources & Benchmarks
This calculator draws on 2 independent, dated sources. The starting values for expected annual return are taken from the benchmarks below and refresh whenever the snapshots are updated.
Methodology & Review
SIMPLE IRA growth uses compound interest with regular contributions. The calculator returns balance projection. SIMPLE IRA (Savings Incentive Match Plan for Employees) is U.S. small business retirement plan for businesses with <100 employees. 2024 contribution limit: $16,000 + $3,500 catch-up if 50+. Employer match required: either dollar-for-dollar up to 3% of compensation OR non-elective 2% of compensation for all eligible. Easier administration than 401(k). RELIABILITY: Reliable for documented contribution. Less reliable when comparing to other small business plans (SEP IRA, Solo 401(k), 401(k)) — each has different advantages depending on business size, income level, employee composition. SIMPLE IRA generally optimal for small business 10-99 employees seeking moderate-complexity plan with employer match.
Updated