The amount an employee contributes from their salary to a SIMPLE IRA cannot exceed $13,500 in 2020 and 2021 ($13,000 in 2019 and $12,500 in 2015 – 2018). SIMPLE IRA Rules on Contributions The contribution limits for a SIMPLE IRA are different than the 401(k) contribution limits. The 2019 contribution limit for traditional and Roth IRAs is $6,000 or your taxable income for the year if less than $6,000.   If this is your situation, it typically makes sense to choose a Roth IRA contribution over a nondeductible IRA. You can also make a $3,000 catch-up contribution each year if you are at least 50 years old. Unlike a 401(k) plan, however, Simple IRAs are only available to small employers … Those 50 or older can contribute an additional $3,000 in 2019 and 2020. You notify employees of the reduced limit within a reasonable time before the 60-day election period during which employees can enter into salary reduction agreements. Salary Deferrals Allowed: Yes, may contribute the lesser of: 100% of compensation or $13,000 ($16,000 if age 50 or older) in 2019 and $13,500 ($16,500 if age 50 or older) in 2020. An employer can not maintain and contribute to any other employer retirement plan in … Also compare SEP-IRA limits to the 401(k) contribution limit for employees, which is $19,500 ($26,000 for ages 50 or older) in tax year 2021. An official website of the United States Government. Contributions to a traditional or Roth IRA are limited to $6,000 as of 2019, but if you’re 50 or older, you can contribute up to $7,000. You must make the contributions that you promised your employees in the SIMPLE IRA plan notice. An employer may choose to make a matching contribution less than 3%, but it must be at least 1% and for no more than 2 out of 5 years. The contribution limit into 401(k)s for employee salary deferrals is $19,500 in 2020 and 2021 -- $6,000 more than a SIMPLE IRA. Plan Sponsors: Mandatory 3% matching contribution or 2% non-elective contribution; Participants: Up to 100% of compensation, with a maximum of $13,000 for 2019 ($16,000 if age 50 or older) and $13,500 for 2020 ($16,500 if age 50 or older) Establishment deadline Details concerning the employee's opportunity to make or change a salary reduction; Your decision to make either a matching or nonelective contribution; and. Prior to … Contributions: Funded by employer contributions and elective employee salary deferrals. SIMPLE IRA Contribution Limits As an employee , you can put all of your net earnings from self-employment in to a SIMPLE, up to $13,000 in 2019 and $13,500 in 2020 in salary reduction contributions. For a Roth IRA or traditional IRA, the maximum annual contribution for 2020 and 2021 is $6,000 (plus $1,000 if you're 50 or older). Specifically, it is a type of Individual Retirement Account (IRA) that is set up as an employer-provided plan. John’s employer is required to match John’s contribution up to 3% of his entire calendar-year compensation or $1,800 (3% of $60,000), even though John stopped contributing to the plan on September 30.   An employee may defer up to $13,500 in 2020 and 2021 ($13,000 in 2018; $12,500 in 2016 – 2018, subject to cost-of-living adjustments for later years). SIMPLE IRA contribution limits. Those 50 or older can contribute an additional $3,000 in 2019 and 2020. The maximum matching contribution is always 3% of the employees’ compensation for the entire calendar year. Each type of self-directed IRA has an annual contribution limit and a date by which the contribution must be made. If the employee is age 50 or over, they may contribute up to $16,000 in 2019 and $16,500 in 2020. Option 1. As mentioned, there are two types of SIMPLE IRA contributions: elective employee contributions and nonelective employer contributions. Page Last Reviewed or Updated: 13-Nov-2020, Request for Taxpayer Identification Number (TIN) and Certification, Employers engaged in a trade or business who pay compensation, Electronic Federal Tax Payment System (EFTPS), Webinars for Tax Exempt & Government Entities, Treasury Inspector General for Tax Administration, match each employee's salary reduction contribution on a dollar-for-dollar basis up to 3% of the employee's compensation (not limited by the annual compensation limit), or, make nonelective contributions of 2% of the employee's compensation up to the annual limit of $290,000 for 2021 ($285,000 for 2020), subject to, The limit isn't reduced for more than 2 years out of the 5-year period that ends with (and includes) the year for which the election is effective; and. The IRS has released 2019/2020 IRA contribution limits for Traditional IRAs, Roth IRAs, SEP IRAs, SIMPLE IRAs, Individual 401(k) plans, HSAs, and ESAs which are viewable in the sections below. SIMPLE IRA contribution limits 2020 for employees For 2021, the amount employees may contribute to a SIMPLE IRA plan is capped at $13,500 per year. Employers can match employee contributions up to 3% of the applicable employee's income. If you miscalculated elective deferrals and employer contributions and contributed less than required by the SIMPLE IRA plan document, find out how to correct this mistake. The catch-up contribution remains the same, but as of 2019 the limit for contributions increased to $13,000. Features: A SIMPLE IRA is easy to set up and has low administrative responsibilities. If you (and your spouse if married) are covered by an employer-sponsored plan and your AGI is above these limits, you can still contribute to a Traditional IRA, but your contributions will not be deductible. Maximum Contributions for Employees: Employer contribution plus salary deferral limit. No other contributions can be made to a SIMPLE IRA plan. Administration is simple and costs may be low. Contribution features. If you're an employee, you can contribute a percentage of your compensation up to a limit of $12,500 for 2016. Plan Sponsors: Mandatory 3% matching contribution or 2% non-elective contribution; Participants: Up to 100% of compensation, with a maximum of $13,000 for 2019 ($16,000 if age 50 or older) and $13,500 for 2020 ($16,500 if age 50 or older) Establishment deadline   Unlike IRAs and 401(k)s, SEP-IRAs do not offer any catch-up provisions. Click here What are the SIMPLE IRA contribution limits? Your Roth IRA contributions may also be limited based on your filing status and income. You must make matching and nonelective contributions to the financial institution maintaining the SIMPLE IRA no later than the due date for filing your business's income tax return, including extensions, for the taxable year that includes the last day of the calendar year for which you made the contributions. Generally, tax benefits are lost if the SIMPLE IRA plan fails to satisfy the Internal Revenue Code requirements. They do have a 7 business day safe harbor rule. Employers, in accordance with IRS guidelines, have to also contribute to your SIMPLE IRA. There are no income limitations to contribute to a non-deductible Traditional IRA, and the maximum contribution per year is $6,000 for tax year 2019 and $6,000 for tax year 2020 ($7,000 for tax year 2019 and $7,000 for tax year 2020 if you're age 50 or over). He made a salary reduction contribution of $12,000 to his employer’s SIMPLE IRA plan from January 1 to September 30. Instead of matching contributions, an employer can choose to make nonelective contributions of 2% of each eligible employee’s compensation. If you're an employee, you can contribute a percentage of your compensation up to a limit of $12,500 for 2016. You may, but aren't required to, limit nonelective contributions to eligible employees who have at least $5,000 (or some lower amount selected by the employer) of compensation for the year. If an employee earns $300,000 and contributes 3% of her SIMPLE IRA ($9,000), her employer can only match 3% of $280,000 ($8,400). The SIMPLE IRA works well as a start-up retirement plan for small employers who do not currently sponsor retirement benefits like a 401(k) plan or a 403(b) plan.Like other kinds of individual retirement accounts (IRAs), employees in the program can choose to make salary reduction contributions, and the employer makes matching or nonelective contributions. A SIMPLE IRA is a retirement plan for small businesses that offers your employees a salary-deferral contribution feature along with a matching employer contribution. You may elect to reduce the 3-percent matching contributions for a calendar year, but only if: To determine if the limit was reduced below 3 percent for a year, any year before the first year in which you (or a predecessor employer) maintain a SIMPLE IRA plan will be treated as a year for which the limit was 3 percent. Contributions are allowed at any age beginning in tax year 2020 provided you have earned income (including after age 70 1/2). IRA Contribution Limits. The salary reduction contributions under a SIMPLE IRA plan are "elective deferrals" that count toward the overall annual limit on elective deferrals an employee may make to this and other plans permitting elective deferrals. 2020 SIMPLE IRA contribution limit is $13,500 or $16,500 if age 50 or older. Employers must continue to make matching or nonelective contributions to employees’ SIMPLE IRAs even after an employee reaches age 72 (70 1/2 if the employee reached age 70 ½ before January 1, 2020) must also begin to take required minimum distributions from the account. Employer Fees: No annual fees or set-up costs 1: Plan Set-up Deadline: Option 2. The catch-up contribution limit is $3,000, making the SIMPLE IRA contribution limit $16,500 for participants age 50 or older.   But the good news is that the SEP-IRA contribution … If your employer offers a SIMPLE IRA, you can contribute up to $13,000 if you're under age 50 or up to $16,000 if you're 50 or older. See IRA Contribution Limits. SIMPLE IRA. Contribute 2% of each employee's compensation. Example:  Bob’s annual salary is $50,000 and he starts contributing to his employer’s SIMPLE IRA plan on September 1. They must make matching contributions or nonelective contributions by the due date (including extensions) of their federal income tax return for the year. A Savings Incentive Match Plan for Employees Individual Retirement Account, commonly known by the abbreviation "SIMPLE IRA", is a type of tax-deferred employer-provided retirement plan in the United States that allows employees to set aside money and invest it to grow for retirement. IRA Contribution Limits. In 2021, the general limit on total employer and employee contributions is $58,000 and if you are age 50 and up, the base limit is $64,500, which includes the $6,500 catch-up amount. SIMPLE IRA plans for employees with an employer match option. If your plan is subject to Department of Labor rules, you may have to deposit employees’ deferrals sooner. A SIMPLE IRA is an employer-sponsored plan for businesses with 100 or fewer employees. Employees who are age 70 ½ or over may make salary deferral contributions to their SIMPLE IRAs. This requirement does not apply if the employer makes nonelective contributions instead. Prior to the employees' 60-day election period (which generally begins on November 2nd prior to each calendar year), you must provide to each eligible employee: See IRS Publication 560 and the Instructions to Form 5305-SIMPLE PDF and Form 5304-SIMPLE PDF for information on the notification requirement. Employer Fees: No annual fees or set-up costs 1: Plan Set-up Deadline: So, if you contribute 3% from every paycheck, your employer would match the deposit in full. Employee contributions You can make salary deferrals (salary reduction contributions) of up to $13,500 to a SIMPLE IRA plan in 2020 and 2021 ($13,000 in 2019). See Notice 98-4 for more information. The employer must then provide its employees a SIMPLE IRA plan disclosure statement containing the general SIMPLE IRA plan rules and plan provisions. If an employee participates in any other employer plan during the year and has elective salary reductions under those plans, the total amount of the salary reduction contributions that an employee can make to all the plans he or she participates in is limited to $19,500 in 2020 and 2021 ($19,000 in 2019). Maximum Contributions for Employees: Employer contribution plus salary deferral limit. Employees can contribute up to $13,000 or 100% of their annual income – whichever is less. The IRS requires that contributions to a SIMPLE IRA be reported on the Form 5498 for the year they are actually deposited to the account, regardless of the year for which they're made. employer contributions: a. matching contributions or b. nonelective contributions. Anyone with an earned income and their spouses, if married and filing jointly, can contribute to a Traditional IRA. You're generally required to either: 1. match each employee's salary reduction contribution on a dollar-for-dollar basis up to 3% of the employee's compensation (not limited by the annual compensation limit), or 2. make nonelective contributions of 2% of the employee's compensation up to the annual limit of $280,000 for 2019 ($275,000 for 2018), subject to cost-of-living adjustments in later years. Your required contributions as the employer are low. This requirement does not apply if the employer makes nonelective contributions instead. If an employee earns $300,000 and contributes 3% of her SIMPLE IRA ($9,000), her employer can only match 3% of $280,000 ($8,400). Click here What are the SIMPLE IRA contribution limits? An employer may not place any restrictions on the amount of an employee's salary reduction contributions, except to comply with the annual limit on salary reduction contributions. Participants may contribute on a pretax basis, up to the annual limit of $13,500 for 2021. Employees may not be excluded from participating in a SIMPLE IRA plan based solely on their age. SIMPLE IRA Contribution Limits As an employee , you can put all of your net earnings from self-employment in to a SIMPLE, up to $13,000 in 2019 and $13,500 in 2020 in salary reduction contributions. 2019 SIMPLE IRA Contribution Limits For 2019, the annual contribution limit for SIMPLE IRAs was bumped up to $13,000. A SIMPLE IRA is funded by: For 2020 and for 2021, annual employee salary reduction contributions (elective deferrals) limited to $13,500* For employees age 50 or over, a $3,000 "catch-up" contribution is also allowed* There are two sets of contribution limits: one for the employee and one for the employer. You cannot suspend or modify your employer matching contributions mid-year. The Savings Incentive Match Plan (SIMPLE) IRA is a convenient employer retirement plan that allows contributions from both the company and the employee. Individuals age 50 or older may make catch-up contributions for 2020 up to $3,000 for a … Yes, you do. An official website of the United States Government. SIMPLE IRA accounts are individually managed by employees and are funded by both the employee and employer. However, if you did not deposit the contribution timely, you must amend the tax return and pay any tax, interest and penalties that may apply. The most current IRS 5305-SIMPLE if you require that all contributions under the SIMPLE IRA plan be initially deposited with a financial institution of your choosing Election Notice The second disclosure is an annual election notice, which focuses on employee and employer contributions. In the meantime, eligible employees (including the business owner) must establish SIMPLE IRAs to receive their contributions, either at the DFI named for the plan or at financial organizations of their choosing, whichever is applicable. The annual contribution limit for 2019, 2020, and 2021 is $6,000, or $7,000 if you’re age 50 or older. No, employee contributions to a SIMPLE IRA plan are not deductible by participants from their income on their Form 1040. As a result, significant contributions can be made into a SIMPLE IRA even at lower income levels. No, you must base your SIMPLE IRA plan employer matching contribution on the employee’s entire calendar-year compensation, regardless of when the employee starts or stops contributing during the year. Consequently, the only way to contribute to both a 401(k) and a Simple IRA is if you change employers during the year. Employees age 50 or over can contribute an extra $3,000 as a catch-up contribution. Joe’s employer must make a matching contribution of $700 because the employer is only required to match the amount Joe actually contributes during the year up to a maximum of 3% of his calendar-year compensation. SIMPLE IRA Contribution Limits Eligibility for SIMPLE IRAs Any business, sole proprietor, partnership, or corporation with fewer than 100 employees who earned at least $5,000 in the preceding year. An employee's compensation up to $290,000 for 2021 ($285,000 for 2020) is taken into account to figure the contribution limit. Common Simple IRA Employer Questions Below is a list of questions frequently asked about SIMPLE-IRA plans. If you're age 50 or over, you can contribute an additional $3,000 (in 2015 - 2021) in catch-up contributions. For self-employed persons with no common-law employees, the latest date for depositing salary reduction contributions for a calendar year is 30 days after the end of the year, or January 30th. As mentioned, there are two types of SIMPLE IRA contributions: elective employee contributions and nonelective employer contributions. SIMPLE IRA contribution limits are slightly lower than 401(k) limits, although higher than what is permitted with a traditional IRA. Employees can contribute up to 100% of compensation or a maximum of $13,000 for 2019 or $13,500 for 2020. The annual contribution limit for 2015, 2016, 2017 and 2018 is $5,500, or $6,500 if you’re age 50 or older. SIMPLE IRA participants are allowed to make annual contributions up to certain maximums, and in 2019, that number will rise to $13,000 for those younger than 50. These rules require you to transfer your employees’ elective deferral contributions to their SIMPLE IRAs at the earliest date on which the employer can reasonably segregate the contributions from the employer’s general assets. Employee salary reduction contributions to a SIMPLE IRA are not included in the “Wages, tips, other compensation” box of Form W-2, Wage and Tax Statement PDF, and are not reported as income on your Form 1040. SIMPLE IRA participants are allowed to make annual contributions up to certain maximums, and in 2019, that number will rise to $13,000 for those younger than 50. For 2020, the annual contribution limit for SIMPLE IRAs was bumped up to $13,500 (that's $500 more than the limit for 2019). If you haven’t timely given the annual notice to all eligible employees, find out how to correct this mistake. Employer contribution limits. 1 year ago. A summary description (that the financial institution where the SIMPLE IRAs are maintained usually provides). 1. You notify eligible employees that a 2-percent nonelective contribution will be made instead of a matching contribution; and. You may deduct all contributions made to your employees' SIMPLE IRAs on your tax return. The employer is generally required to match each employee's salary reduction contributions on a dollar-for-dollar basis up to 3% of the employee's compensation. There is a 7-day safe harbor to deposit elective deferrals for which most SIMPLE IRA plans qualify. Like a 401(k) plan, a Simple IRA helps you and your employer save for your retirement. Your required contributions as the employer are low. In addition there is a maximum 3% employer contribution. A SIMPLE IRA plan must satisfy certain rules to obtain favorable tax benefits. In calculating employer contributions, up to $280,000 in compensation may be considered in 2019 and up to $285,000 in 2020. There are annual contribution limits in place by the IRS that mandate the maximum amount of money you (and your employer, if applicable) can deposit into your account. There is no age limit. Matching contributions may be made on a per-pay-period basis, or by the due date of the employer’s tax return (including extensions). If the employer makes this choice, it must make nonelective contributions whether or not the employee chooses to make salary reduction contributions. Higher contribution limits — Participants can contribute more than with a traditional IRA, and employer contributions or matching are required. Assuming the employee does not participate in another retirement plan, the maximum contribution to a SIMPLE IRA or SIMPLE 401(k) plan will increase $500 in 2019 to $13,000. Employers must permit their employees to elect to have salary reduction contributions made at an employee-specified level, expressed as a percentage of compensation for the year or as a specific dollar amount. ... All contributions to your SIMPLE IRA belong to you immediately, and you can withdraw them at … Employer contribution limits. Employee SIMPLE IRA Contribution Limits for 2020 An employee cannot contribute more than $13,500 to a SIMPLE IRA in 2020, a $500 increase over the 2019 limit. Contributions are broken into two categories, with employee salary deferrals limited to $13,000 and another $13,000 potentially coming from matching employer contributions. Keep in mind that ... A Guide to SIMPLE 401(k) Plans If you are self-employed or if you are an employee with access to a SIMPLE IRA, you can contribute up to a maximum of $13,500 for the 2021 tax year (unchanged from 2020). The SEP-IRA limit is up to 25% of an employee’s salary or up to $57,000, depending on which is less. Find answers to questions about plan establishment, participation, fees, contributions, tax information, and employer responsibilities. SIMPLE IRA. The SIMPLE IRA works well as a start-up retirement plan for small employers who do not currently sponsor retirement benefits like a 401(k) plan or a 403(b) plan.Like other kinds of individual retirement accounts (IRAs), employees in the program can choose to make salary reduction contributions, and the employer makes matching or nonelective contributions. However, you may be able to retain the tax benefits if you use one of the IRS correction programs to correct a failure. Yes, you must. A SIMPLE IRA plan cannot have a last-day-of-the-year employment requirement. The employer is generally required to match each employee's salary reduction contributions on a dollar-for-dollar basis up to 3% of the employee's compensation. Contributions under a SIMPLE IRA plan may only be made to a SIMPLE IRA, not to any other type of IRA. SIMPLE IRA Information. For a Roth IRA or traditional IRA, the maximum annual contribution for 2020 and 2021 is $6,000 (plus $1,000 if you're 50 or older). This notice is provided within a reasonable time before the 60-day election period during which employees can enter into salary reduction agreements. What are the 2019 contribution limits for a SIMPLE IRA? In general, when correcting a failure under the program, the correction should put employees in the position they would have been had the failure not occurred. Option 1. Retirement plan owners can make yearly cash contributions to their individual IRAs and/or workplace plans. If you are eligible for an employer-sponsored 401(k) and have income exceeding the limits for a regular IRA deduction, you may still be eligible for a Roth IRA contribution, which has significantly higher income limits. You may substitute the 2-percent nonelective contribution for the matching contribution for a year, only if: For purposes of the 2-percent nonelective contribution, the compensation taken into account must be limited to $290,000 for 2021 ($285,000 for 2020), subject to cost-of-living adjustments in later years. All employer contributions are immediately vested. Participants may contribute on a pretax basis, up to the annual limit of $13,500 for 2021. 2020 and 2021 Contribution Limits In 2020 you can contribute up to $19,500 of your own money to your 401 (k) and $26,000 if you’re aged 50 or over … If you haven’t deposited salary reduction contributions to employees’ SIMPLE IRAs by the above dates, find out how you can correct this mistake. It doesn’t matter that Bob only contributed to the plan during the last 4 months of the calendar year. Anyone with an earned income and their spouses, if married and filing jointly, can contribute to a Traditional IRA. Contribution Limits. Each eligible employee may make a salary reduction contribution and the employer must make either a: No other contributions may be made under a SIMPLE IRA plan. Contributions to a traditional or Roth IRA are limited to $6,000 as of 2019, but if you’re 50 or older, you can contribute up to $7,000. Ultimately, the total amount will depend on the employer’s matching formula. The compensation on which the employer calculates the 2% of gross pay contribution is limited to $285,000 (for non-elective contributions only), making the maximum non-elective contribution $5,700 (2% of $285,000). An employer may choose to make either matching contributions to an employee's SIMPLE IRA, from 1% to 3% of his or her salary, or non-elective contributions of 2% of the employee's salary, … SIMPLE IRA Contribution Limits for 2019 total $26,000. A 401(k) is a defined contribution retirement plan offered by an employer to its employees. Self employed business owners that have a SIMPLE IRA are able to contribute up to 100% of their income up to the 2020 contribution limit of $13,500 or $16,500 if age 50 or older. Tax benefits — Employer contributions qualify as a tax-deductible business expense. Highlights of Changes for 2019 The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $18,500 to $19,000. If the employee is otherwise eligible, they must share in any SIMPLE IRA contribution. A SIMPLE IRA is a retirement plan for small businesses that offers your employees a salary-deferral contribution feature along with a matching employer contribution. A collection of individual IRAs with a participant-level advisor relationship. If the employer chooses this 2% contribution formula, it must notify the employees within a reasonable period before the 60-day election period for the calendar year. Disadvantages: Relatively low maximum annual contribution limits… SIMPLE IRA and SIMPLE 401(k) Contributions: Increase. Employees age 50 or over can make a catch-up contribution of up to $3,000 in 2016 - 2021 (subject to cost-of-living adjustments for later years). An employer can only offer either a 401(k) or a Simple IRA. The limit on annual contributions to an IRA, which last increased in … Bob’s employer must match Bob’s contributions up to 3% of Bob’s calendar-year compensation, or $1,500 (3% of $50,000). This is the same as the 2020 limit but an increase from 2019’s limit of $13,000, and an even bigger leap from the $12,500 limit imposed from 2015 to … In calculating employer contributions, up to $280,000 in compensation may be considered in 2019 and up to $285,000 in 2020. Contributions come from both employee salary reductions and employer non-elective or matching contributions (similar to those found in a 401(k) plan). The Department of Labor rule for deposit of the salary reduction contributions may be stricter. Option 2. Failure to satisfy these rules, for example, by not making required contributions, can result in the loss of favorable tax benefits for you and the participants. Example: John earns $60,000 a year. Employees can contribute up to 100% of compensation or a maximum of $13,000 for 2019 or $13,500 for 2020. This includes eligible employees who die or quit working before the contribution is made. Workers age 50 or older … Generally, plans that benefit employees other than an owner-employee (and spouse) are subject to the Department of Labor rules. Dollar-for-dollar match of employee contributions up to 3% of each employee's compensation (which can be reduced to as low as 1% in any 2 out of 5 years). The SIMPLE IRA contribution limit is $13,500 with a catch-up limit of $3,000. There is no age limit. See  more than one plan. Page Last Reviewed or Updated: 12-Nov-2020, Request for Taxpayer Identification Number (TIN) and Certification, Employers engaged in a trade or business who pay compensation, Electronic Federal Tax Payment System (EFTPS), Webinars for Tax Exempt & Government Entities, Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans), Publication 4334, SIMPLE IRA Plans for Small Businesses, Treasury Inspector General for Tax Administration, Retirement Topics - SIMPLE IRA Contribution Limits. He contributes $1,536 through December 31. You must make the nonelective contributions for each eligible employee regardless of whether the employee elects to make salary reduction contributions for the calendar year. Administration is simple and costs may be low. Individuals age 50 or older may make catch-up contributions for 2020 up to $3,000 for a … A salary reduction contribution is an amount an employee elects to have contributed to his or her SIMPLE IRA, rather than paid in cash. 401(k)s. The annual contribution limit for employees who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan is $19,500 for 2020—a $500 boost over 2019. Also compare SEP-IRA limits to the 401(k) contribution limit for employees, which is $19,500 ($26,000 for ages 50 or older) in tax year 2021. If you extend your tax return, then you have until the end of that extension period to deposit contributions, regardless of when you file the tax return. Example: Joe’s annual salary is $70,000 and he contributed 1% of his compensation, or $700, to his employer’s SIMPLE IRA plan.   Unlike IRAs and 401(k)s, SEP-IRAs do not offer any catch-up provisions. 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